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tate power company PT PLN and PT Multi Fabrindo Gemilang signed on Tuesday a memorandum of understanding (MoU) on the expansion of 10 electricity substations in Jakarta in a bid to strengthen the city’s grid system.

The substations are those located in Gedung Pola, Manggarai, Dukuh Atas, Ketapang, Mangga Besar, Kebon Sirih, Old Gambir, Kemang, New Senayan and Kembangan.

“The main goal of this project is to strengthen the reliability of the Jakarta grid system,” PLN spokesperson Bambang Dwiyanto told reporters in Jakarta. The expansion would be in the form of the construction of gas insulated substations (GIS) at the 10 sites, he continued.

PLN strategic procurement division head Karmiono, who also attended the press conference, revealed the total investment needed to expand the substations was US$31.2 million. Construction is scheduled to be completed in 2014.

“The contractor [PT Multi Fabrindo Gemilang] has to process the loan agreement which takes up to six months. The construction itself will take around 18 months. 85 percent of the funding for the project will come from lenders, while the remaining 15 percent will come from PLN internal reserves,” he explained

France-based BNP Paribas would be the loan facilitator.

Karmiono said the project was launched in conjunction with seven other projects aimed at improving the Jakarta grid system. The seven projects, which are expected to absorb more than $300 million in investment, will include the laying of underground cables, the construction of the GIS and the installation of new transmission systems.

“For the financing of the eight projects, contractors have proposed a financing scheme by appointing loan facilitators. The facilitators come from many countries, including Korea, France and Japan. We hope all projects can be complete by 2014,” Karmiono said.

Karmiono explained that the expansion of the substations would reduce the possibility of blackouts. “Jakarta consumes 5,500 megawatts [MW] or more than a quarter of 19,400 MW of the Java-Bali grid system,” he said.

The expansion will improve connections between substations in Jakarta, if there is a disturbance in one substation, power can be supplied from alternative substations.

“Therefore, if there is disturbance in a substation, the blackout time can be cut significantly or even avoided altogether during the transition of the electricity supply from one substation to another,” Karmiono claimed.

This year, PLN has set aside Rp 65 trillion (US$7.06 billion) for capital expenditure. In 2011, it achieved Rp 11.7 trillion in net profits, up 16 percent from 10.09 trillion a year earlier. As of Dec. 31, PLN’s total asset value was recorded at Rp 433.8 trillion, rising 17 percent from 2010.