The plant will be sited in West Java and is part of the Indonesian government's initiative to ease electricity shortage woes.

According to the PLN director Ali Herman Ibrahim, "We have signed a contract with Mitsubishi to build a power plant at a cost of $354 million. The first unit of the plant with 240 megawatts is expected to be in operation later this year."

"The project is expected to be concluded in 2005," he added.

Indonesia routinely suffers from electricity blackouts and the annual demand for electricity is estimated to be growing by around 10% per annum.