Indonesia Signs $7B Deal With China Firms

Four of China's power equipment giants have agreed on an unmatched $7 billion deal with Indonesia.

Harbin Power, Shanghai Electricity Corp., Dongfang Electricity Corp. and China National Technology Import Export Corp. would sell equipment able to generate 10,000 megawatts from coal-fired stations, the companies said.

Equivalent to about one-third of Indonesia's existing power capacity, it is part of Beijing's plan to reduce dependence on oil-based power and ease energy shortages, South China Morning Post reported Monday.

During the Boao forum on China's Hainan island last weekend, the four manufacturers signed a memorandum of understanding with Perusahaan Listrik Negara, Indonesia's state-owned electricity company, with the contract to be formally signed in August.

The agreement calls for the Chinese side to provide both equipment and funding, through export credits from China Exim Bank and the Bank of China.

Building eleven 300-megawatt plants within 30 months and six 600-megawatt plants within 36 months is a tight schedule.

The four offered a construction cost of $800 to $850 per kilowatt against $1,000 to $1,700 from U.S., German and Japanese companies.

Price and speed were the main reasons the four were able to defeat their competitors, the companies said.