Semen Gresik cuts down investment for power plants

State-owned cement producer PT Semen Gresik has cut back its 2008-2014 expenditure to US$1.31 billion from $1.6 billion as part of consolidation measure to cope with the global economic crisis, Kontan reported on Saturday.

Corporate secretary Saifuddin Zuhri said in Jakarta on Friday that the investment cutback would affect the plan to build new coal-fired power plants to support the operation of the company?s existing and new cement factories.

With the reduction of the spending, the company would only build three power plants, all in Sulawesi, instead of 5 power plants as earlier planned, he said, adding that the three new power plants were expected to begin operation in 2011.

The construction of the three power plants with a total capacity of 105 megawatt would cost the company about $171 million, he said.

In an advertisement in national newspapers on Nov. 12, 2007, the company said it would build five power plants in different locations from 2008 through 2011.

The company said it would build a 2x65 MW power plant in Tuban, East Java with investment of $170 million, a 3x35 MW plant in Indarung, West Sumatra ($146 million) and a 35-MW plant in Pangkep, South Sulawesi. All of them will supply electricity to existing plants. Semen Gresik has combined production capacity of 17MTPA

The company also plans to construct 2x35MW plant in a new location in Java ($109 million) and a new location in Sulawesi with similar capacity ($95 million) to support the new cement plants with capacity of 2.5 MTPA each that would be built in the two areas.

However, Saifuddin said that the planned construction of two new cement factories in Sulawesi and Java would go ahead as scheduled. The new plant which would be built in Java would cost about $413 million, while the other one to be built in Sulawesi would cost about $345 million. The two cement factories were expected to begin commercial operation in 2011-2012 with combined capacity of 5 million tons.(*)