Sarulla financial close may be delayed
Thursday, March 20 2014 - 06:25 AM WIB
Financial closure for Sarulla 330-MW geothermal project in North Sumatra may be delayed from the initial schedule of March 24 as the government has yet to fulfill the necessary condition for the deal to be signed.
PT Medco Power President Director Fazil Alfitri told Petromindo.Com on Wednesday that a delay in the financial close would consequently push back the schedule for drilling programs. ?Drilling can only take place after financial close is secured,? he said, but did not disclose the specific condition that must fulfilled by the government.
The Sarulla consortium has opened tender to drill 20 wells within the concession area, with five companies participated.
Medco Power is part of a consortium, which also includes Japanese firms Itochu and Kyushu Electric and US-based Ormat Technologies, assigned to develop the 3x110 MW plant, touted to be the largest geothermal plant in the country. Medco Power holds a 37.25 percent interest in the consortium.
Fazil also said that the consortium has appointed US services company Halliburton to handle integrated project management for Sarulla.
Development of the Sarulla plant will require investment of about US$1.5 billion. About $1 billion of the costs will be financed by loans from the Japan Bank for International Cooperation (JBIC) and the Asia Development Bank (ADB).
Development of the Sarulla geothermal power plant has been delayed for more than 20 years due to various obstacles. The project started to move forward after the government approved in April of last year the second amendment of the so-called power purchase agreement, under which state utility PLN will purchase the power to be produced by the plant at an average price of 6.79 US cents per kWh.
At the same time, the Ministry of Finance also issued the so-named Business Feasibility Guarantee Letter to PLN and PT Pertamina Geothermal Energy, which owns the geothermal concessions, in North Tapanuli and South Tapanuli regencies, North Sumatra Province.
As reported by this portal last year, the first stage of the power plant was expected to be completed in 2016, the second in 2017, and the third in 2018.
Editing by Alexander Ginting