Indonesia Medco-Led Consortium Wins $600 Million Power Project

08-01-06 11:08 PM EST

JAKARTA -(Dow Jones)- A consortium led by PT Medco Energi Internasional ( MEDC.JK) has won a bid issued by Indonesia's state-run utility company to build a 340-megawatt geothermal power plant in North Sumatra province, in what is the largest single-contract geothermal project to date in the geothermal industry worldwide.

The consortium's other members are U.S.-based Ormat Technologies Inc. (ORA) and Japan's Itochu Corp.(8001.TO), Ormat said in a July 31 press release posted on its Web site.

"The total project cost is projected to be about $600 million," Ormat said, without indicating the source of the financing.

The Sarulla project represents the largest single-contract geothermal project to date in the geothermal industry worldwide and is a reflection of the large scale and high productivity of Indonesia's geothermal resources, as well as an indicator of the potential of Indonesia's geothermal power industry, it said.

The consortium will build, own and operate the Sarulla power plant and sell the electricity to state-run electricity company PT Perusahaan Listrik Negara under a 30-year contract.

Ormat didn't disclose the price for the electricity it will sell to PLN, but Bisnis Indonesia daily reported Wednesday that it was set at $0.0468 a kilowatt- hour.

The Sarulla plant will be built over the next five years in three phases of 110 to 120 MW each, with the first power generating unit scheduled to begin operating within 30 months and the last within 48 months from the financial closing.

The consortium expects annual revenue from the electricity sales to be around $110 million, once the third phase of construction is completed, Ormat said.

Indonesia, located along the so-called the Pacific Ring of Fire of active volcanoes, is estimated to hold potential exploitable geothermal resources of at least 20,000 MW, which are widely distributed throughout the archipelago.

The total installed capacity of geothermal power plants in Indonesia is currently around 800 MW.

The Indonesian government is seeking to increase utilization of geothermal energy amid rising global oil prices.

-By I Made Sentana; Dow Jones Newswires; 62-21 39831277; I-Made.Sentana@ dowjones.com

-Edited by George Bernard
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