An infrastructure financing guarantee agency, PT Penjaminan Infrastruktur Indonesia (PII), will provide a guarantee for building a IDR30trn ($3.3bn) power plant in Central Java, Indonesia.

PII president director Sinthya Roesly told The Jakarta Post that the decision was taken after the government issued the 2010 presidential decree on the financing guarantee for infrastructure projects under the public-private partnership scheme.

The agency will cover financial loss risks that might occur from government or non-government actions like regulation changes, late permission issuance and the absence of tariff adjustment.

The guarantee will enable continuation of the tendering process to select a contractor to build and operate the coal-fired power plant in Central Java.

The Jawa Tenga coal-fired power plant, when constructed, will have 1,000MW of power.

PT PLN business and risk management director Murtaqi Syamsudin said the operation of the new coal-fired power plant would boost the electrification ration in Java-Bali from the present 70% to between 80 and 85% in 2016.

PLN is to be the representative of the Indonesian Government in supervising the power plant development project.

The construction of the power plant is expected to start in early 2012, according to Syamsudin.