Medco to spend $600m for Sarulla geothermal project

Publicly-listed energy firm PT Medco Energi International Tbk said it was ready to develop the Sarulla geothermal project in North Sumatra and had prepared US$600 million funds for the project, Koran Tempo reported on Wednesday.

Company president director Hilmi Panigoro said on Tuesday that the funds would be spent in three phase of development of the project, $200 million for each phase. In the first phase, Medco will build power units with the combined capacity of 110 Megawatt (MW). In the second phase, the capacity will be increased to 200 MW, which will be further raised to 330 MW in the third phase.

?Once PLN gives (us) the project, we shall immediately work on the project. The first phase will be completed in two years,? Hilmi said, referring to state electricity company PT Perusahaan Listrik Negara (PLN).

PLN earlier announced that it would transfer the 330-MW geothermal project to Medco following the resignation of the winner of project PT Geo Dipa, a joint venture of PLN and state oil and gas company PT Pertamina. Geo Dipa pulled back from the project due to difficulties to raise funds. Medco and its partner Ormat was named the second preferred bidder in last year?s tender for the project.

Hilmi said PLN had yet to notify Medco about its decision.

Medco will raise funds from a consortium of local and international banks to finance the development of the project, Hilmi said, but he refused to disclose the names of the banks.

Medco will stick to its proposal to sell Sarulla?s power at 4.642 US cents per kilowatt hour (kWh), Hilmi said. (*)