House wants govt to lower cost of GITET Kediri project, Govt agrees

The House of Representatives' Commission VIII on energy and mining has demanded the government and state electricity company to lower the cost of high voltage relay station (GITET) project in Kediri, East Java, no matter how the government or PLN would pursue it.

In a hearing with Minister of Energy and Mineral Resources Purnomo Yusgiantoro, the commission's chairman Irwan Prayitno told the minister to lower the cost, either by re-negotiation with the investors or by re-tendering the project.

"The conclusion from the House's Commission is that we want the government to lower the value of the Kediri project, whatever the measures the government will take, either through the process of re-tendering or by re-negotiation," Irwan said.

Responding to the House's demand, Purnomo said that the government was currently re-negotiating with the investors of the Kediri project.

The Kediri project has been awarded to a consortium of PT Pembangunan Perumahan and PT Indokomas Buana Perkasa-Alsthom T&D, with financing supports from BNP Paribas-Credit Agricole Indosuez of France.

The value of the contract for Kediri project is US$35.94 million and Rp 17.51 billion, or in rupiah, the total cost would be Rp 342.28 billion. This value is 250 percent more expensive that the value of similar project in Depok, West Java, that would be built by a consortium of PT Multifab-Mitsubishi Electric-GEC Alsthom, with a total cost of US$410,000 dollar, plus Rp 20 billion and 1.366 million Japanese yen, or in rupiah Rp 136.7 billion.

The contract for Kediri was signed in 1998 when PLN was led by Djiteng Marsudi. In the same year, PLN also signed a contract with investors for another relay station in Tasikmalaya, West Java, whose value was also far higher than the Depok project that was tendered in the middle of this year.

The government has decided to re-tender the Tasikmalaya project.

Separately, Coordinating Minister for Economic Affairs Rizal Ramli said that the government agreed to review the Kediri project, and demanded PLN's board of commissioners to decide whether to re-negotiate the project or re-tender it.

He blamed PLN's board of commissioners for their slow response to the public outcry for the marked-up projects. They even tended to cleanse themselves from any wrongdoing.

"PLN commissioners have been passive. All want to cleanse themselves. We will demand the review for GITET Lot III project, weather through re-negotiation or re-tendering," he said. (*)