Government drafts new regulation on private power<\/p>\n
JAKARTA (JP): The government is drafting a regulation on the
\nsupply of private power to free state electricity company PT
\nPerusahaan Listrik Negara (PLN) from the obligation of buying
\npower from projects awarded to independent power producers (IPP)
\nwithout competitive bidding.<\/p>\n
Minister of Mines and Energy Kuntoro Mangkusubroto said that
\nunder the new presidential decree PLN would only buy power from
\nsolicited power projects -- projects proposed by the government
\nand awarded to IPPs through a competitive bidding process.<\/p>\n
IPPs will continue to be allowed to develop projects on an
\nunsolicited basis but the government and PLN will have no
\nobligation to buy power from them.<\/p>\n
\"The new regulations will not affect IPP power projects
\nalready in possession of power purchase agreements (PPA) signed
\nby the government,\" Kuntoro said in a weekly press conference at
\nhis office.<\/p>\n
He said the government would issue the new presidential decree
\nlater this year to replace 1992 presidential decree No. 37.<\/p>\n
PLN has signed contracts to buy power from 26 projects, only
\none of which was awarded through open bidding, namely the 1,320
\nMegawatt (MW) Tanjung Jati A coal-fired power plant in Jepara,
\nCentral Java.<\/p>\n
The plant belongs to PT Tanjung Jati Power Company, which is
\n30 percent owned by Japan's Tomen Power Corporation, 30 percent
\nowned by Britain's National Power, 20 percent owned by PT Bakrie
\nPower Corporation and 20 percent owned by Maharani Paramitra, a
\ncompany that belongs to Soeharto's daughter Siti Hediati Prabowo.<\/p>\n
PT Tanjung Jati sells power to PLN for 5.75 U.S. cents per
\nkilowatt hour (kwh), the lowest price offered by any of the 26
\nIPPs. Other IPPs charge PLN between 6 cents and 8.4 cents per kwh
\nfor power.<\/p>\n
Tanjung Jati A was among 16 power projects put on hold by the
\ngovernment in September 1997 as part of retrenchment efforts to
\ndeal with the monetary crisis.<\/p>\n
Analysts say that awarding power projects without competitive
\ntenders has resulted in PLN having to pay an excessively high
\nprice for power supplied by IPPs.<\/p>\n
International power companies are thought to have snapped up
\npower projects by carefully courting Soeharto's family and
\ncronies and former PLN officials.<\/p>\n
Many IPPs, emboldened by the immunity bestowed upon them by
\ntheir weighty local backers, are alleged to have then violated
\nlocal regulations on a regular basis, according to analysts.<\/p>\n
One such example is the fact that IPPs have obtained contracts
\nquoting power prices in dollars, in spite of the 1992
\npresidential decree stating that: \"Power prices (from IPPs)...
\nmust be quoted in rupiah and (the price must be) stipulated in
\nthe contract.\"<\/p>\n
The 1992 presidential decree also stipulates that:
\n\"Investments made by private companies to produce power are not
\nguaranteed by the (Indonesian government)\". However, some IPPs
\nclaim the government has guaranteed their investments, opening
\nthe door for them to receive compensation if PLN fails to buy
\npower from them.<\/p>\n
PLN has refused to pay IPPs in full for months now in an
\nattempt to come to terms with severe financial difficulties it is
\nexperiencing as a result of the rupiah's sharp depreciation in
\nvalue against the U.S. dollar.<\/p>\n
PLN president Adhi Satriya said earlier that his company plans
\nto begin renegotiating contracts with IPPs in December and will
\nseek to lower the price of power supplied through these routes to
\naround 4 cents per Kwh.<\/p>\n
Kuntoro also said the government is drafting a new
\npresidential decree to end the monopoly over geothermal resources
\ncurrently held by the state oil and gas company Pertamina.<\/p>\n
Under the new regulation, no geothermal development projects
\nwill be awarded to contractors without a competitive tender. (jsk)<\/p>",
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