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tate-owned electricity firm PLN is slated to kick off the development of a 1,400 kilometer power transmission grid in Sumatra following a deal with state construction firm Waskita Karya.

The grid, with 500 kilovolts (kV) in capacity, will connect Muara Enim in Jambi to Langsa in Aceh, according to PLN'€™s Sumatra region director, Amir Rosidi.

'€œWe are targeting that by 2018 or 2019, we will see a connected Sumatra so that when there is any excess electricity supply in the north, we can transfer it to the southern part and vice versa,'€ Amir said.

The development plan is estimated to cost Rp 22 trillion, according to Amir.

Sumatra, particularly the northern part, is currently facing a limited supply of electricity. Out of the total demand of 4,600 megawatts (MW), PLN only has power plants totaling 5,000 MW in capacity. In the electricity business, a reserve margin of 30 percent of the total demand is needed to ensure that any disruption in power delivery will not lead to blackouts.

The Sumatra grid is seen as necessary to form the backbone of the island'€™s electricity supply, particularly when the development of power plants under the government'€™s 35,000 MW program is realized.

As part of the 1,400 km transmission grid project, PLN has awarded a contract for the development of the first two sections of the grid to Waskita. The construction firm will develop a 235-km section from New Aur Duri in Jambi to Peranap in Riau and a 160-km section within Riau, connecting Peranap to Perawang.

The contract for the New Aur Duri-Peranap section is valued at Rp 3.88 trillion while the Peranap-Perawang section is Rp 2.83 trillion. Under the deal, for which an official contract signing was performed on Friday, Waskita will build the two sections within three years.

'€œWe will start the construction as early as tomorrow and will at least already make contact with local administrations. We are expecting that land procurement won'€™t be a problem upon the implementation of the land acquisition law,'€ Waskita president director M. Choliq said.

Land acquisition is often a key problem in infrastructure projects in the country. To settle the issue, the government passed in 2012 a law on land acquisition that can be used to acquire plots needed for public infrastructure.

Choliq said that Waskita had secured commitments from Bank Rakyat Indonesia to be the lead bank supporting the financing for the Rp 6.6 trillion projects.

While Waskita is working on the two sections, PLN is currently preparing documents needed to open for tender the remaining sections totaling 1,005 kilometers.

'€œWe will launch other tenders early next year. We are expecting that the other sections will be developed along with the development undertaken by Waskita,'€ Amir said.

He added that PLN had also planned for the 500 kV grid in Sumatra to be connected in the future to Java through an undersea cable, which is currently also in the procurement process. Moreover, the grid is also targeted to transfer electricity from and to Malaysia.