$200M Required for PLN’s Aceh Gas-fired Project

PLN is seeking interested bidders for funding the construction of a $200 million gas-fired power plant in Arun, Aceh.

“The winner will be announced by early next year, so that the construction can start,” said PLN’s director for planning and risk management, Murtaqi Syamsuddin. The winner will provide the funding for the engineering, procurement and construction of the 200MW power plant project. PLN will supervise the construction.The lender, he added, will be required to provide the funding to PLN without a guarantee from the government. “[The mechanism] is similar to our global bonds issuance,” he said.

PLN is planning to shut down the operation of a 150 MW diesel-fuel power plant in Aceh when the Arun project is completed in 2014. Running a diesel-fuel power plant is more expensive than a gas-fired power plant.PLN is attempting to reduce the rising cost of electricity generation by building more power plants that utilize less-costly power sources like coal and natural gas.

In 2011, PLN used diesel fuel for 21% of its generating capacity, absorbing 10.4 million kiloliters of fuel a year. Coal accounted for 46%, with consumption at 36.5 million tons, while gas was responsible for 21%, consuming 328 trillion British thermal units.

The latest project comes amid plans to convert Arun liquefied natural gas plant into a receiving terminal and regasification facility, Murtaqi added. In May, PLN inked a memorandum of understanding with resource giant BP under which 230 million standard cubic feet of natural gas per day will be allocated to PLN.

Murtaqi said the agreement was not yet final because the pricing formula had yet to be settled and approval from both the Energy and Mineral Resources Ministry and the state oil and gas regulator, BP Migas, was required. PLN is in the final stages of the first phase of a plan to develop plants that can produce 10,000 MW of power.