Funding for coal-fired power plant projects outside Java remains unclear

State electricity company PT Perusahaan Listrik Negara (PLN) has opened a tender for the construction of 25 coal-fired power plants outside Java as part of its effort to provide additional power supply of 10,000 watts under the government?s fast track program, Kompas reported Tuesday.

The daily said, however, that the financing scheme for the construction of the power plants remains unclear.

Under the regulation of a tender for the construction of coal-fired power plants in Java, tender participants are required to provide 85 percent of funds in the form of export credit.

Meanwhile, under the regulation on tender for the coal-fired power plants outside Java, tender participants can propose the form of financing through export credit scheme or local funds in any form of financing to cover the entire project cost.

Head of the fast track program?s daily execution team Yoga Pratomo said that regarding the financing scheme for the constriction of coal-fired power plant outside Java, the cost for the project will be covered by PLN by issuing bonds from the national banks.

The construction of coal-fired power plants outside Java costs around US$2.5 billion.

Meanwhile, PLN?s chief commissioner Alhilal Hamdi expressed the hope the tender will be participated in by local contractors.

?The amount of funds they provide will depend on the financial capability of the respective participants. They will receive financial support from local banks,? Alhilal said.

PLN?s director for finance Parno Isworo said that the funding scheme for the construction of coal-fired power plants outside Java is still under discussion. PLN?s continued issuance of bonds has a good rating that supported the issuance of global bond in last October.

PLN booked losses of Rp4.5 trillion in the first semester of 2006. The company targeted earlier to book a profit of Rp20.9 trillion. (*)