ARCO says PLN is after all a good customer<\/p>\n
JAKARTA (JP): The president of Atlantic Richfield Indonesia
\nInc. (ARII), Leon Codron, has termed state electricity company PT
\nPLN a good customer despite the latter's failure to meet its
\nfinancial obligations.<\/p>\n
Codron said PLN's controversial decision to pay its power and
\ngas suppliers, including ARII, at the precrisis rate of Rp 2,450
\nper U.S. dollar was understandable given the heavy impact of the
\neconomic crisis on the company.<\/p>\n
\"This is not the customer's fault. This is the economic
\ncrisis. We have a good customer. We have to work jointly to
\nresolve a headache like this,\" Codron said on Monday.<\/p>\n
\"I can tell you very frankly PLN has been a very good
\ncustomer. We very much appreciate what PLN has had to do. We work
\nwith them in cooperation.\"<\/p>\n
Cash-strapped PLN has refused to pay in full the independent
\npower producers (IPP) and gas producers for their power and gas
\nsupplies, citing the toll from the crisis on its operations.<\/p>\n
PLN, which gets revenue in rupiah but buys power and gas in
\ndollars, began paying its power and gas suppliers at the
\nprecrisis rate in late 1997.<\/p>\n
The rupiah traded at Rp 9,100 to the dollar on Tuesday.<\/p>\n
A flood of criticism came in response to its measures, and
\nseveral lawsuits have been launched against the company for
\nbreach of contract.<\/p>\n
Codron also praised state gas distribution company PGN and
\nstate fertilizer firm PT Petrokimia Gresik despite their failures
\nto fully pay ARII for its gas supplies.<\/p>\n
ARII, a subsidiary of U.S. major energy company Atlantic
\nRichfield Company (ARCO), has signed contracts to supply PLN's
\ngas-fired power plants in Muara Karang and Tanjung Priok in
\nJakarta and in Gresik Baru, East Java.<\/p>\n
Under the contract, ARII supplies the Muara Karang power plant
\nwith 1.04 trillion cubic feet (tcf) of natural gas at the flat
\nprice of $2.45 per million British thermal unit (MMBTU) from 1994
\nto 2004.<\/p>\n
It is supplying the Gresik power plant with 1.68 tcf of
\nnatural gas at the flat price of $2.53 per MMBTU from 1993 to
\n2012.<\/p>\n
Codron denied the allegation that the failure of PLN, PGN and
\nPetrokimia to fully pay ARII for its supplies had caused cash-
\nflow problems for the company and forced it to resort to layoffs.<\/p>\n
He acknowledged ARII plans to reduce its workforce by about
\n1,000 in the near future, but said the measure was part of the
\ncompany's efficiency programs.<\/p>\n
He said only companies with low costs could weather the
\ntighter competition in the world's oil and gas industry amid
\ncollapsing prices of oil and the global recession.<\/p>\n
Codron said the company had not yet received approval from
\nstate oil and gas company Pertamina for the company's voluntary
\nretirement program.<\/p>\n
He added that despite the retrenchment, the company would
\nmaintain its exploration and production expenditures at about
\n$500 million, similar to expenditures in the areas in previous
\nyears. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/arco-says-pln-is-after-all-a-good-customer-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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