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10 February 2004 - Indonesia's State-run electricity company PT Perusahaan Listrik Negara (PLN) said it has signed a contract with Mitsubishi Corp for the construction of a 740 MW power plant in Cilegon, Banten.
PLN director Ali Herman Ibrahim said the project will cost $340m, of which some $289m will be funded by a 12-year export credit facility provided by the Japan Bank for International Corporation (JBIC).
The new plant is expected to start commercial operations in 2004, Ibrahim said.
PLN has earlier said that it has reached an agreement with China's CNOOC for supply of gas to the Cilegon plant. CNOOC will build a 60 km pipeline to transport gas from its Pabelokan fields offshore southern Sumatera to Cilegon. The two parties have reportedly agreed on gas purchase price of 2 usd per mln British thermal unit (MMBTU).
PLN has said that it expects independent power producers (IPPs) to be able to supply between 5000 and 7000 MW of electricity by 2010 to avert a capacity shortage for the regions of Java and Bali.
The Java-Bali region requires 12 000 MW of additional power generating capacity, or about twice the current level.
Indonesia had run into difficulties with IPPs in the wake of the 1997 economic crisis as the government had to cancel most of its projects in the absence of funds and the rupiah's steep depreciation against the dollar.
PLN purchases electricity from IPPs in dollar-denominated tariffs, while it charges consumers in rupiah.
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