El Paso upbeat on negotiations with PLN<\/p>\n
JAKARTA (JP): El Paso Energy International of the United
\nStates is optimistic that its subsidiary PT Energy Sengkang and
\nthe state electricity company Perusahaan Listrik Negara (PLN)
\nwill be able to settle a dispute over their power purchase
\nagreement.<\/p>\n
El Paso president John D. Hushon said here Monday evening
\nnegotiations over the terms of payment between Energy Sengkang
\nand PLN were progressing and that he was optimistic the talks
\nwould bear fruit in the coming weeks.<\/p>\n
\"We are cautiously optimistic there will be solution to this
\nmatter in four to six weeks,\" Hushon said.<\/p>\n
He said Energy Sengkang understood PLN was unable to fully pay
\nfor its power due to the economic crisis and that it would take a
\nflexible stance in its payment negotiations with the state-owned
\npower company.<\/p>\n
\"We understand that circumstances in Indonesia today are such
\nthat we must be flexible in working out an arrangement so we can
\nadjust to the reality where we are,\" Hushon said.<\/p>\n
PLN has refused to pay for the power it has been buying from
\nEnergy Sengkang at the current exchange rate as stipulated by
\ntheir power purchase agreement.<\/p>\n
PLN has unilaterally set the exchange rate at the pre-crisis
\nlevel of Rp 2,450 per dollar, due to severe financial losses.<\/p>\n
The power purchase agreement is based in U.S. dollars, while
\nthe majority of PLN's revenue is in rupiah.<\/p>\n
The sharp fall in the rupiah's value against the greenback
\nsince July last year has caused an increase in power prices in
\nrupiah terms by over 300 percent.<\/p>\n
PLN suffered a Rp 334 billion loss in the second half of 1997
\nand projects a Rp 1.3 trillion loss this year due to the ongoing
\neconomic crisis.<\/p>\n
PLN has signed power purchase agreements with 26 independent
\npower producers, but only two of them, including Sengkang, are
\ncurrently producing power. The other 24 producers have yet to
\nfinish construction of their facilities.<\/p>\n
The other producer currently operating is PT Daya Bumi Salak
\nPratama, controlled by the Unocal Corp. of the United States. The
\ncompany operates a 165-megawatt (MW) geothermal power plant at
\nMt. Salak, West Java.<\/p>\n
El Paso owns 47.5 percent of Energy Sengkang. Australia's
\nEnergy Equity owns an equal 47.5 percent share of the company,
\nwhile 5 percent is controlled by Trihasra Sarana Jaya Purnama,
\nheaded by President Soeharto's daughter Siti Hardiyanti Rukmana.<\/p>\n
Energy Sengkang operates a 135-MW gas-fired combined cycle
\npower plant in Sengkang, South Sulawesi, which came on line last
\nOctober.<\/p>\n
Hushon said Energy Sengkang and PLN started negotiations eight
\nweeks ago, but that they were still inconclusive.<\/p>\n
He said PLN proposed buying power from the company at a rate
\nof Rp 5,000 per dollar, but that Energy Sengkang said it could
\nonly accept the rate if it was close to the market rate.<\/p>\n
\"If PLN pays at the rate of Rp 5,000, and the rate is close to
\nthe market rate, we can survive and we can deal with that,\"
\nHushon said.<\/p>\n
Minister of Mines and Energy I.B. Sudjana has said previously
\nthe government has set up a task force involving several
\nministers to handle the dispute between PLN and the power
\nproducers.<\/p>\n
Sudjana indicated the government might provide PLN with
\nfinancial help to enable it to buy power at the exchange rate set
\nby the independent producers.<\/p>\n
\"In principle, we never want to make investors suffer losses.
\nWe shall never break the power purchase agreements we have
\nsigned... We are looking for a solution which will at least
\nprevent investors from suffering losses and make them still able
\nto operate,\" he said.<\/p>\n
Secretary-General of the Ministry of Mines and Energy Darmoko
\nSlamet, who is vice chairman of the task force, has said the task
\nforce had asked the Ministry of Finance to provide PLN a subsidy
\nto pay for its power. The ministry has yet to reply to the
\nrequest. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/el-paso-upbeat-on-negotiations-with-pln-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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