Govt issues guarantee letters for Pemalang power plant

The government will soon issue a guarantee letter to investors willing to take part in the tender for the development of a 2,000 megawatt (MW) coal-fired power plant in Pemalang, Central Java, Investor Daily reported Monday.

Finance Minister Agus Martowardojo said in Jakarta last week that the letter would guarantee winners of the tender to obtain a license for the construction, to obtain lands, coal supply and to ensure that the government will buy the electricity.

?The guarantee is much broader than those provided for power plants developed under the first-track of 10,000 MW power plant development plan program,? he said, adding that the project will be guaranteed by the government, in cooperation with PT Penjaminan Infrastruktur Indonesia (PII).

The project will cost about US$3 billion to build as part of the public private partnership (PPP).

Seven foreign companies have passed the prequalification phase of the tender, that is 1) China Shenhua Energy Company Limited 2) CNTIC ? Guandong Yudean Consortium 3) GDF Suez - J Power Consortium 4) Korea Electric Power Company (KEPCO) 5) Marubeni Corporation 6) Mitsubishi Corporation 7) Mitsui-International Power Consortium.

The guarantee latter will be announced on Jan. 13, 2011 in front of the seven investors, which have passed pre-qualification phase in the project, Agus added.

The project will be developed under independent power producer (IPP) and build-own-operate-transfer (BOOT) schemes with PLN obliged to buy the power supplies under a 25-year power purchasing agreement (PPA). (*)