PLN to buy out Unocal?s geothermal project

State electyricity firm PLN plans to buy out Unocal's Sarulla geothermal project as the two sides have failed to agree an electricity price for the plant, an official said on Wednesday.

PLN and Unocal have been in lengthy talks on the project, which would provide an important alternative energy source for Indonesia's northern part of Sumatra island.

"We still have differences on the price so we will close the case and buy out the project," PLN President Director Eddie Widiono told reporters, adding negotiations on the buy-out were taking place.

PLN said in February that the price offered by Unocal -- 6.1 cents per kilowatt hour at the time -- was still considered too high compared with other geothermal power projects.

A source at Unocal who declined to be identified said PLN and Unocal were in talks about the buy-out but gave no details.

The Sarulla project was postponed by the government in 1998 due to the Asian financial crisis and was originally planned to be a 110 megawatt (MW) plant that could have expanded to 390 MW.

Eddie said PLN would build a new 200 MW coal-fired Labuhan Angin power plant in north Sumatra at a cost of some $190 million to compensate for the failure of the Sarulla project.

"The Sarulla project will be continued but it still needs time. Therefore, PLN will build a 200 MW coal-fired plant in north Sumatra," he said.(godang)