Indonesia's state-owned power company PLN inc., is likely to face another threat to its 10,000 megawatt coal-fired power plant project as steel prices have soared by about 34 percent, the Tower Fabrication Association was quoted by local media as saying Saturday.

Chairman of the Association Ahmad Fahmi urged PLN to revise its budget for power transmission networks under existing contracts with 42 developers, given the fact that the price of tower materials such as angle steel has jumped from about 7,000 rupiah (about 75 U.S. cents) per kilogram in October to 9,700 rupiah (1.03 dollar) as of this week.

"The rising prices of steel will surely affect the budget for tower construction as the material accounts for 70 percent of the cost," Ahmad said. He said 50 percent of raw materials for angle steel, including billets and slabs, were imported and tower makers could not do anything about volatility of global markets.

Therefore, the average cost of transmission towers would be 24 percent higher than the 123 million rupiah (some 13,806 dollars) price term in contracts between PLN and builders and towers could cost as much as 152.52 million rupiah (some 16,286 dollars). The situation, he said, would undoubtedly cause developers to demand renegotiation of the contracts.

"We suggest that transmission power grid contractors and PLN reevaluate existing budgets as the price estimates on the contracts are no longer adequate," Ahmad was quoted by the Jakarta Post as saying. The government has already pushed back the project completion date from year-end 2009 to mid-2010 due to financing problems.

PLN and tender winners are still scrapping for an estimated 6.5 billion dollars in loans out of a total 8.3 billion dollars needed to complete the project.