Govt sets price for Tanjung Jati B power plant

The government, state-owned electricity company PLN and Sumitomo Corp. have agreed to set up the price of the power from Tanjung Jati power plant at between US$0.2226-$0.325 per kWh.

As a part of the agreement signed in Jakarta on Monday evening, the power project, which was delayed in 1998 as part of the government?s retrenchment program to cope with the crisis, would be resumed under a leasing financing system.

PLN?s president Eddie Widiono said the agreement, which was contained in the minimum semi annual payment agreement (MSAPA), would be followed by another agreement.

?After this amendment, there is still another amendment in the form of a final agreement, which should be further approved,? Eddie said, adding that the three parties had also agreed to resume the project in the middle of next year.

Sumitomo initially offered a price range of between $0.026 and $0.047 but the government rejected the proposal for being too high. The government then a leasing system in the financing of the project in a bid to cut the construction cost.

According to Eddie the continuation of the Tanjung Jati B project would cost US$1,65 billion and would be jointly financed by BFIC and Sumitomo Corp.

"The project could be carried out only after BPIC disburse US$1.1 billion, and Sumitomo about $550 million,? he said.

The Tanjung Jati power project is one of the country?s large-scale power projects which were delayed due to the government?s retrenchment program to cope with the economic crisis which hit the country late in 1997. The project located in Jepara, central Java is 60 percent completed. (*)