Govt to soon issue liquidity guarantee for Tanjung Jati B power project

The Ministry of Finance on Wednesday promised to soon provide liquidity guarantee for state electricity firm PT PLN as required by Japan Bank for International Cooperation (JBIC) which had planned to finance the construction of PLN?s Tanjung Jati B coal-fired power project in Jepara, Central Java.

?We are finalizing the wording of the liquidity guarantee document. We will issue the document within two days,? said financial institutions director general Darmin Nasution in a parliamentary hearing.

Meanwhile, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on a separate occasion the construction of the Tanjung Jati B plant might start in 2003, pending the issuance of the liquidity guarantee. The project was initially expected for completion in 2005.

The liquidity facility will be used in case PLN fails to pay Sumitomo Corporation, contractor of the power project.

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

The power project, which was suspended in 1998 when Indonesia faced severe economic crisis, is planned to have capacity of 1,320 megawatts. (*)