Power contractors demand increase in construction costs

Contractors of at least five of 25 power plants to be built outside Java as part of the country?s 10,000 MW crash power program have asked the government to raise construction costs amid an escalation in prices of steel and other building materials, Media Indonesia reported on Wednesday.

Chanty Triharso, the director general of machinery industry at the Industry Ministry, said in Jakarta on Tuesday that the contractors demanded an increase in the construction costs by about 30 percent to US$3.9 billion.

The contractors involved in the five power plants to be built outside Java include PT Barata Indonesia, PT Wijaya Karya, PT Metaepsi, PT Rekadaya Elektrika and PT Adhi Karya.

Chanty said that the construction of the power projects might be delayed if the government refused to make an adjustment in the construction costs of the power projects.

According to him, the developers have not begun the projects due to an increase in steel prices and other building materials. ?The price of steel in the world has increased by about 45 percent since January,? he added.

The 10,000 MW program which was initiated in 2006 includes the construction of 10 new coal-fired plants in Java and 25 others outside Java. Some of the new power plants are expected to begin operation at the end of 2009. (*)