PLN faces funding obstacle in S. Sumatra mine-mouth power plant projects

State-owned electricity firm PT Perusahaan Listrik Negara (PLN) is facing funding difficulties in carrying out the South Sumatra (Sumsel) 9 and Sumsel 10 mine-mouth power plant projects, Kontan daily reported on Tuesday.

The paper quoted PLN Director of Risk and Business Management, Murtaqi Syamsudin as saying that the company was facing difficulties to raise the US$2.1 billion funds to finance the required transmission for high voltage direct current (HVDC).

To help resolve the problem, Murtaqi said that his company was ready to partner with third parties in the transmission project.

Due to this uncertainty, PLN has yet to conclude the winning bidders for the construction of the Sumsel 9 (1,200 MW) and Sumsel 10 (600 MW) projects in Musi Banyuasin Regency in the tenders opened in November of 2012.

Electricity from the US$3.5 billion mine-mouth power plants project is planned to be distributed to the industrial island of Java.

On Monday, this portal also reported difficulties faced by Indian Maduchon Group in raising the required equity funding for the development of 2x150 MW IPP mine-mouth power plant, also in Musi Banyuasin, causing the project to be stalled.

The lack of equity funding has prompted bankers to withheld loan disbursement for the development of the project, also known as the Sumsel 7 power plant, which is part .of the 4,200MW mine-mouth power plants planned to be developed in coal-rich province of South Sumatra. (*)