Govt provides liquidity guarantee for resumption of Tanjung Jati B power project

The government on Thursday agreed to provide liquidity guarantee for state electricity firm PT PLN as required by Japan Bank for International Corporation (JBIC) which had planned to finance the construction of PLN-owned Tanjung Jati B coal-fired power project in Jepara, Central Java, Suara Karya daily reported on Friday.

The newspaper quoted PLN president director Eddie Widiono as saying on Thursday that the liquidity facility would be used in case PLN failed to pay Sumitomo Corporation, contractor of the Tanjung Jati B power project.

?So, if something happens out of PLN?s control and disables it to pay its debts, PLN will use the government?s liquidity facility for the payment,? Eddie told reporters after a cabinet meeting in which the decision to provide liquidity facility for PLN was made.

Eddie said the government and PLN would sign an agreement on the liquidity guarantee.

The power project was planned to have capacity of 1,320 megawatts and was scheduled for completion in 2005.

The project was one of the country?s large-scale power projects which were suspended by the government under its retrenchment program to cope with the economic crisis which hit Indonesia late in 1997.

Sumitomo had pledged to continue the project and inject fresh investment funds of about US$400 million if the government guarantees it. (*)