Legislators blast PLN over 10,000 MW power tender

Several legislators blasted on Tuesday state electricity firm PLN for its alleged favor to Chinese firms in the tendering process for the development of 10,000 MW coal-fired power plants across the country.

Effendi Simbolon of the PDI Perjuangan party said that many well-reputed power firms had been initially interested to join the tender for the projects. But they later decided not to participate in the prequalification process because PLN said the government would not provide a guarantee for the projects.

Strangely, Effendi said, after the pre-qualification process, the government said it would provide a guarantee for investors to undertake the projects.

?When bidders were invited (to participate in the pre-qualification process), it was said there would be no government guarantee. Now, there is an effort to provide guarantee. We consider this as a trapping so that only Chinese companies would join the tendering process, ? Effendi said during a hearing between PLN and the House of Representatives?s Commission VII which among others oversees energy affairs.

The government launched early this year the crash program to build 10,000 MW coal-fired power plants in order to increase the nation?s power supply capacity and cut the nation?s dependence on oil for power generation. Not long after announcing the crash program, Vice President Yusuf Kalla, along with top officials of PLN, visited China to invite investors to develop the projects. Yusuf argued that Chinese firms could build the power plants at cheap costs.

On July 31, PLN announced that 43 firms and joint ventures had passed the pre-qualification tender for the contracts to build the 10,000 MW coal fired power plant projects under the so-called ?Crash Program?. Chinese firms, either individually or in joint ventures with local companies, dominate the list of the companies. The firms include among others Chengda Engineering Corp, Dongfeng Electric Corporation, Hubei First Electric Power, China National Electrical Equipment Corp.

On Sept 11, Yusuf said the government would fully guarantee the funding for construction of coal-fired power plants

?Had it been announced in the beginning that the government would provide a guarantee, world-class firms from Europe would have surely participated in the bidding process. Thus, we are afraid there is a ploy to let China take (most of) of the projects,? Effendi said.

PLN?s President Director Eddie Widiono said PLN was approaching China because it had a huge coal fired power capacity of between 30,000 MW and 40,000 MW.

He denied however that PLN favored China, citing that aside from Chinese companies, the pre-qualification process had been participated in by companies from Poland, India, South Korea, Japan and Malaysia.

He admitted that the government guarantee remained a topic of discussion at the Ministry of Finance when PLN launched the pre-qualification bidding.

?In the beginning of the tender, there was not yet any concrete support (from the government). But, now there are already indications that the government would provide support letters. The (support letter) draft has been distributed to bidders (who passed the pre-qualification process) for study,? Eddie said.

At the request of the bidders, he said, PLN has decided to delay the date for bidding document submission to Oct. 4 this year.

?The contracts will be signed in late October or early November,? Eddie said. (Godang)