PLN plans to spend $1.6 billion on power plants.

State power utility company PT Perusahaan Listrik Negara (PLN) plans to spend at least US$1.6 billion to build four or five gas-fired power plants in an effort to help prevent power shoratges in Java and Sumatra, The Jakarta Post newspaper repored in its Tuesday edition.

The company is expected to allocate some $400 million on each plant, which will have a capacity of about 750 megawatts (MW), said PLN director for power generation, Ali Herman Ibrahim, after meeting Vice President Jusuf Kalla on Monday.

"The planned power plants will have a combined capacity of 3,000 MW. However, we are still undecided whether to construct four or five plants," Ali said, adding that PLN would open the bidding for the projects this month.

He said the plants were expected to be in operation by 2010 or 2011. He would not specify their locations.

The plants are part of PLN's strategy to reduce its dependency on fuel generated plants, following a declining domestic fuel production and the rising cost of oil.

The company is working to phase out its diesel-fired generators, which well be replaced with combined-cycle coal and gas-fired plants, with a target of reducing its fuel consumption to less than 5 percent by 2006.

Aside from the power plants, PLN also plans to spend about $300 million to build the country's liquefied natural gas (LNG) receiving terminal in Cilegon, Banten, which will include LNG storage and regasification facilities.

The terminal, which is expected to start operation in 2007, will receive LNG from ships and convert it into gas. It will also get its supply through pipelines from Sumatra.

Ali said that Japan-based Sumitomo Corp. and Mitsui &Co. had expressed interest in building the power plants and the LNG terminal, while Malaysia's Petrolium Nasional Bhd. was interested in developing the receiving terminal

PLN is now shortlisting tenders for the projects.(*)