Indonesia Goes Shopping for Nuclear Reactor : Energy: American and Japanese companies are in a heated competition to supply its first atomic power plant.

“Wrap your imagination around the idea of a nuclear power plant with no safety-grade pumps, chillers or coolers,” reads the Westinghouse Electric Corp. brochure. “Simpler to construct . . . affordable for the power producer.”

As Indonesia goes shopping for its first nuclear reactor, Westinghouse is lobbying hard here for its latest model, the $1.7-billion AP600.

The Westinghouse push comes in the midst of heated competition between the United States and Japan to shape Indonesia’s nuclear future. But Pittsburgh, Pa.-based Westinghouse is trying to sell a stripped-down 600-megawatt plant that has yet to be built anywhere in the world. It awaits the nod from the U.S. Nuclear Regulatory Commission.

Some Indonesian imaginations don’t stretch as far as Westinghouse would like. “We don’t want to be an experimental tool,” said Umar Said, head of the planning bureau at the Department of Mining and Energy. “Many of us prefer a proven technology.”

Some Indonesians would prefer to skip the nuclear option altogether as the financing for the project is uncertain.

Yet the AP600 has caught the eye of Indonesia’s prime advocate of nuclear power--B. J. Habibie, minister of state for research and technology and a close aide of President Suharto. With electricity shortages threatening the flow of foreign investment, Habibie and his colleagues are eager to start construction by 1997--particularly when they smell a bargain.

“Being the first to implement this modification, we would like to share the costs because we face a higher risk,” said Zuhal, director for the assessment of energy resources, who like many Indonesians uses only one name.

Westinghouse has indicated its interest in slashing the price tag, said Iyos Subki, deputy director general of the National Atomic Energy Agency. “If they agree, we sign the contract,” he said.

Meanwhile, Westinghouse is wooing Jakarta with other amenities. Since last September, 10 Indonesian engineers have undergone training in Westinghouse’s U.S. facilities, receiving a “subsistence allowance” that amounts to nearly $250,000 a year, according to Iyos. The company is also helping Indonesia design computer software to work out detailed cost projections for the AP600.

Meanwhile, the Japanese are steadily pitching their products in Indonesia.

Last winter, Bechtel International Inc., a unit of San Francisco-based Bechtel Group, went up against New Japan Engineering Consultant Inc. (NewJEC) in the bidding for a feasibility study on the proposed power plant site in central Java. NewJEC is a subsidiary of Kansai Electric Power Co., a utility that operates several plants produced by Mitsubishi Heavy Industries Ltd.

Jakarta views Bechtel as closely tied to Westinghouse and General Electric Co., another leader in the nuclear business.

When the American side got unofficial word that NewJEC had won, U.S. Ambassador John Monjo fired off a letter to Radius Prawiro, Indonesia’s minister coordinator for economic, financial and industrial affairs, praising Bechtel’s qualifications and questioning the criteria for the selection. The Japanese ambassador responded with his own letter, as his camp groused that the United States was repeating its heavy-handed behavior in last year’s contest for a major telecommunications contract.

In that incident, President Bush wrote to Suharto in support of American Telephone & Telegraph Inc. The other leading contender was NEC Corp. of Japan. Following Bush’s letter, the Indonesian government arranged new bidding, eventually steering a diplomatic course by splitting the work among both companies.

This time, Jakarta decided on a new evaluation team to review the nuclear bids. In late May, however, the spoils went to the Japanese NewJEC team alone. “I think it’s a pity that the American side lost,” said one U.S. energy specialist. “In the project implementation, the odds will favor the country whose engineers did the study.”

But with Jakarta hinting that Westinghouse is a step ahead, the Japanese can’t afford to relax. Mitsubishi is scrambling to arrange visits for Indonesian engineers. Eventually, however, Westinghouse and Mitsubishi may cooperate, since the U.S. firm holds the license for the conventional pressurized water reactor perfected by the Japanese.

Other firms are hanging tough. General Electric Corp. will begin hosting a crop of seven engineers for a year-long training, and French, German and Canadian companies have stepped up their lobbying efforts.

NewJEC’s $11-million contract has yet to be signed. Iyos said it would be finalized by Aug. 16, attributing the delay to technical questions relating to the 4 1/2-year-long study. Other sources contend that nuclear politics in Japan is a factor.

The Japanese government has repeatedly turned down Indonesia’s grant requests for a feasibility study in the face of rising domestic opposition to nuclear power.

The Japanese anti-nuclear movement mushroomed after a February accident at a Japanese plant manufactured by Mitsubishi and operated by Kansai.

In early July, following press reports that the Export-Import Bank of Japan would provide the loan for Indonesia’s study, a small environmental group picketed the bank and organized a flood of protest letters.

While Jakarta said the bank had agreed to a loan with 9% interest, bank officials in Indonesia and Japan maintained that no formal loan application had been made.

“At this moment, we haven’t processed any credit to that project,” said K. Imai, the Tokyo manager for Indonesia loans. “That’s the official line,” observed a Japanese insider.

Financing the reactor itself may prove a bigger headache. The World Bank has already ruled out participation and the Asian Development Bank is expected to follow suit.

A 1986 Bechtel study commissioned by Jakarta warned that direct foreign equity investment is “unlikely.” Consultants for the International Atomic Energy Agency completed the gloomy scenario during a Jakarta seminar last September. “The present schemes of export credits and commercial financing do not adequately meet the needs of nuclear power financing,” said H. H. Eschenberg.

Top government economists, as well as some officials at the state-owned electric utility, would prefer to delay construction as worries rise over Indonesia’s balance of payments. A current accounts deficit of $4.3 billion is projected for this year, with the government servicing a $45-billion debt.

This group points to studies that show coal and gas as more economical methods of meeting the country’s energy needs. Indonesia has a proven reserve of 4 billion tons of coal, with an additional 20 billion tons believed to exist. By the year 2000, new technology should be available to better protect the environment from coal emissions, they say.

While the upper echelons of Indonesian government are far from achieving consensus on the necessity and timing of Indonesia’s nuclear program, foreign suppliers have reason for optimism.

President Suharto has already decided to build a nuclear reactor, and, in Indonesia, that’s what counts.