INDONESIA AS NEW EMERGING MARKET

Friday, September 15, 2006

TENDER OF NEW POWER PLANTS HAS BEGUN

The government will open tendering process in October for international power companies in the construction of 30 massive power plant projects around the archipelago.

Djuanda Nugraha Ibrahim, acting president director for state-owned power company, PT Perusahaan Listrik Negara (PLN), said that the bidding would involve coal-fired power plant projects in 30 locations outside of Java Island.

The projects would include between 2,900 MW and 3,100 MW of power for areas in Sumatera, Kalimantan, Maluku, West Nusa Tenggara, East Nusa Tenggara, and Papua, and between 6,900 MW and 7,200 MW of power for areas in Java – the nation’s center of business.

The government has approved the fast-track construction of a series of ambitious coal-fired power projects worth US$8 billion over the next four years, with some of the projects to be excluded from a lengthy tendering process.

It expects that by 2010, the use of expensive fuel-fired power plants will be reduced to just 5% of total capacity from the current 30%, which would cut costs by as much as 80%.

For Java, the government is already in the process of accepting bidding offers, with some 59 interested investors from Japan, China, South Korea, Europe, India, and Malaysia expressing interest. The local investor that have expressed interest in the project are mostly state-owned construction companies.

The government would announce the tender winners for 10 locations across Java in early October 2006.

The foreign investors are: Marubeni and Hitachi from Japan, Essar from India, China Huadian (CHD), China National Machinery Import Export Corporation (CMC), and China National Machinery and Equipment Import Export Cooperation (CMEC) from China.

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