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tate-owned power company PT PLN plans to lay a submarine transmission cable connecting Sumatra and Java with a total investment of US$2 billion.

Company construction director Nasri Sebayang said in Jakarta on Thursday that PLN was currently preparing the documents for the tender process so that the cables could be laid beginning in the third quarter of this year.

“Around 85 percent of the required funds will be obtained from the Japan International Cooperation Agency [JICA], while the remaining 15 percent will come from PLN’s internal budget,” he said in Jakarta.

The loan’s tenure is 30 years with a grace period of 10 years, while the interest is set at 0.3 percent per year.

The cable will span 700 kilometers connecting Bangko in South Sumatra and Bogor in West Java. The cable will be used to transmit power supply from South Sumatra, where a number of coal-fired power plants are currently under construction, to meet surging electricity demand in Java.

“The cable will be able to transmit power with a total capacity of up to 3,000 megawatts [MW] from Sumatra to Java,” Nasri explained.

In Bangko, PLN has planned to construct a coal-fired power plant with a total capacity of 4x 600 MW to supply power to the undersea cable. This project will make the cost of generating electricity more efficient since the company no longer needs to transport coal from South Sumatra to Java.

“We hope that the power plants and the undersea cable can operate on schedule in February 2016. We predict we can begin the construction in 2013,” Nasri said.

To improve efficiency and prevent losses, the electrical current must be converted from alternating current, commonly produced by power plants, into direct current for transmission. This conversion will take place at a power substation to be built in Bangko.

The electricity current will then be converted again into alternating current in a power substation in Bogor before it is connected to the Java–Bali grid system and distributed to customers.

The Sumatra–Java undersea cable is the first project using direct current in Indonesia.

Over the span of 2012, PLN forecasts that electrical consumption on the Java-Bali grid will reach 20,775 MW, growing 5.2 percent from last year. Currently, the total installed capacity in the grid system reaches 23,000 MW, with a peak burden of 19,700 MW.

Last month, PLN also announced that it would install an undersea cable network connecting three tourist islands — Gili Trawangan, Gili Air and Gili Meno — in North Lombok regency in West Nusa Tenggara. The cable will be connected with a diesel-fueled power plant in North Lombok. The company has set aside Rp 40 billion (US$3.43 million) for the project.