Heads of agreement on Bontang power project to be signed soon

The Heads of Agreement (HOA) on the construction of a gas-fired power plant owned by the Bontang administration in East Kalimantan is expected to be signed on March 17, the local Kaltim Post daily reported Monday.

The paper, qouoting a local legislator, said that state-owned power firm PLN will sign the HOA to purchase the power, while oil and gas firm Total E&P Indonesie will sign the HOA to supply gas for the power project.

"The signing will be made in Jakarta to be witnessed by the DPRD (local legislative council) and the Bontang administration," said lawmaker Kholik Hidayat.

The HOA among other stipulate that the gas price would be set at US$2.60 per MMBTU plus toll fee of $0.055 for the first five years. The next five years, the price will increase to between $2.60 and $2.90 depending on world oil price development.

The Bontang administration is teaming up with a private company called PT Altra to develop the power project, which is expected to start operation in September 2007, to help meet rising power demand in Bontang.

The paper said that if Altra backs down from the project, other companies were ready to replace its position, Kholik said.(*)