US$15m repair bill so far, plus lost earnings, and it still...

US$15m repair bill so far, plus lost earnings, and it still ain't fixed!


Sengkang still operating below capacity
Alfian , The Jakarta Post , Jakarta | Tue, 01/26/2010 11:28 AM | Business

The gas-fired Sengkang Power Plant in South Sulawesi is still unable to operate at full capacity due to problems with one of its units, the owner told lawmakers Monday.

The power station is operated by PT Energi Sengkang which is owned 95 percent by Australia-based Energy World Corporation (EWC). The power plant has a total capacity of 195 megawatts (MW), but since the fourth quarter of last year, a unit with a capacity of 60 MW had to be shut down due to problems with turbine blades.

EWCs general counsel Thompson Situmorang said that the repair was supposed to be finished before Christmas last year, but was still being finished by Siemens as the equipment supplier.

Its disappointing for us, because we also suffer losses. We did not get our [optimum] revenue for the last three to four months, Thompson said.

EWCs executive director Brian Allen said Energi Sengkang had spent millions on repairs. The
cost up to today to repair the equipment is in excess of US$15 million, Brian said.

He added that EWC might file a legal suit against Siemens if the company failed to meet the new completion target.

Our worst target [for the completion of repairs] is by the end of January. If by the end of this month Siemens still cannot meet the target, we will consequently have to file a suit against Siemens, Thompson said.

However, outside the hearing, Thompson said a legal suit would be the last option.

Julieta Glasmacher, head of corporate communication at PT Siemens Indonesia, refused to comment on the possibility of a legal case.

So far, we have been coordinating closely with EWC to solve the problem. The repair is running on schedule, she said in a text message.

The Sengkang Power Plant is an important energy source for the local community in South Sulawesi as about 70 percent of the generated power goes to them.

EWC has said it had been in talks with state power utilty PT PLN to expand the power plant by building two more units with an additional capacity of 120 MW.

The construction of the first unit with a total capacity of 60 MW is expected to begin in 2011, while another 60 MW unit is expected to be started in 2012.

EWC said it has allocated $130 million for the expansion project. As the power plants will be gas-fired, the project is still awaiting approval from upstream oil and gas regulator BPMigas to receive required
gas supply.