Investors rush to Indonesia?s power projects

Hundreds of domestic and foreign investors have come to state electricity company PT PLN to get tender documents for several power plant projects in the country.

?This is a surprise. Normally, a power project attracts 20 companies. We had to extend the deadline for the procurement of tender documents from April 20 to May 2,? PLN?s general manager for load supply and control center Muljo Adji was quoted by Kompas as saying on Tuesday.

The state firm has been given the authority to hold the auctions of six power plant projects officially offered by the government last year.

The six projects consist of four coal-fired power plants and two combined cycle power plants. They are Central Java coal-fired power plant (1,200 MW), Bali coal-fired power plant (200 MW), North Sumatra coal-fired power plant (200 MW), North Sulawesi coal-fired power plant (50 MW), East Kalimantan combined cycle power plant (120 MW), Pasuruan combined cycle power plant (500 MW).

He said among foreign investors interested in the projects were Japanese firms Marubeni, Sumitomo and Mitsubishi.

The government has decided to speed up the development of non oil-fired power projects in the country amid worries over rising oil prices. Coal is seen a cheaper alternative for oil. The government has announced a crash program to build coal-fired power plants with a combined capacity of 10,000 MW to meet the increasing demand for power and replace power plants now in operation using oil as fuel.

Cost of power production reaches Rp 132 per kilowatthour (kWh) for coal-fired power plant , Rp 210 if gas is used as fuel and Rp 661 if the fuel is oil.

All the coal-fired power plants, which are to be developed by PLN and private sectors, are expected to be completed between 2008 and 2010.

Director General of Mineral, Coal and Geothermal Resources Simon F. Sembiring assured that the government guaranteed there would be enough coal supply for power plants with a combined capacity of 20,000 MW. The government would coordinate with national coal producers to anticipate the operation of the new coal power plants.

The coordination is necessary to keep them from making a long-term contract.

?The new power plants will start operations two years from now, but (we must) be prepared from now. The (coal) companies will be warned that our demand will be bigger,? Simon said.

Simon said the government would push PLN to use low-calorie coal.

?In Australia, coal with calorie content of 3000 can be used to generate power. We have to develop technology that is suitable for low calorie coal,? he said.

PLN?s deputy director of system plan Bambang Hermawanto said once the new coal fired power plants come into operation, PLN would de-activate its oil-fired power plants and would only activate them in the event of excess demand during peak hours. PLN now operates 4,500 MW oil-fired power plants, including 3,000 MW in Java and 1,500 MW outside Java.

Indonesia is the world?s largest thermal coal an annual output of 145 million tons last year, of which 92.5 million tons were sold on the export markets, 30 million tons on the local market. In 2010, the government predicts coal consumption by national power plants will reach 60 million tons. (*)