Medco may build geothermal power plant in Sumatraadmin
PT Medco Energi Internasional, Indonesia’s largest publicly traded oil company, may build a geothermal power plant in North Sumatra for state utility PT Perusahaan Listrik Negara after the winning bidder pulled out.
PLN named Medco-led group to replace PT Geo Dipa Energi, picked last year as the preferred bidder to build the Sarulla plant, Djuanda Nugraha Ibrahim, acting president director of PLN, said Monday.
“According to the contract, if the preferred bidder resigns, it goes to the second bidder, which is Medco,” Ibrahim told lawmakers at the House of Representatives. “Medco’s price is slightly higher than Geo Dipa’s.”
Indonesia wants to develop its estimated 20,000 megawatts of potential geothermal power capacity to help replace oil and gas as the main sources of energy. Tapping geothermal reserves may also help ease power shortages in the country.
Medco, an oil company that started an electricity division in 2003, is working with Itochu Corp. and Ormat Technologies Inc. on the project. Itochu is Japan’s fourth-largest trading company.
Ormat is a Sparks, Nevada-based company that makes geothermal power equipment and operates power stations.
PLN may have to re-negotiate the price of electricity supplied by Sarulla plant with Medco, Djuanda said.
PLN hasn’t notified Medco that it picked the oil company to build Sarulla, Fazil Alfitri, president director of Medco unit PT Medco Power Indonesia, said Monday.
“We are waiting for a letter of intent from them to appoint us as the winner,” Alfitri said in a phone interview. “The price should be the same as the price we offered before in the tender.”
Geo Dipa offered to sell the electricity 4.52 U.S. cents per kilowatt-hour, Ali Herman Ibrahim, PLN’s director for generation and primary energy said on May last year. Medco offered to sell the electricity at 4.62 U.S. cents per kilowatt hour, he said.
Sarulla will take two years to build after the contract is signed and may start power production in 2009, Djuanda said.
Geothermal plants use wells to tap underground deposits of heated water. The water, which turns into steam upon reaching the surface, is used to power turbines and generate electricity.