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PLN Looks To Japan To Fund $2b Power Project
Yessar Rosendar | November 23, 2009

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State power utility PT Perusahaan Listrik Negara is looking to the Japan International Cooperation Agency to finance a $2 billion coal-fired power plant in Indramayu, West Java.

“JICA is interested in funding the project,” Bambang Praptono, PLN’s director of planning and technology, told reporters after a hearing with the House of Representatives on Monday.

Bambang said the plant, part of the second stage of the 10,000 megawatt ‘fast-track’ program, would have a huge capacity of 2,000 MW and was expected to come on stream in 2015. The project was still at the feasibility-study stage, with the preliminary engineering design work expected to start in 2011, he said.

PLN had also secured $1 billion in soft loans from the World Bank to build a 1,000 MW hydropower plant in Cisokan, West Java, expected to be operational in 2013 or 2014, Bambang said. “We will sign the loan agreement early next year,” he said.

Fabby Tumiwa, executive director of the Institute for Essential Services Reform, an umbrella group of NGOs focused on the power sector, said the overseas financing secured to date was a positive sign as PLN suffered from a high-risk profile.

“It’s positive as power plants cost huge amounts of money. So with these financing arrangements in place, the projects will be able to proceed,” she said.

However, she warned that PLN needed to pay close attention to the terms of the loan agreements with Japanese lenders because they frequently required the use of components and services from Japanese providers.

Fabby said the first phase of the fast-track program was a failure as PLN had not yet constructed even half of the targeted 10,000 MW in generating capacity. “The plants they are building now only have a combined capacity of 3,800 MW, and they won’t come on stream until next year at the earliest,” she said.

Meanwhile, Sugiharto Harsoprayitno, the Energy and Mineral Resources Ministry’s director of geothermal energy, said a $350 million, 110 MW geothermal plant planned for Solok, West Sumatra, was expected to start producing electricity in 2013.