Government renegotiates IPP contracts<\/p>\n
Fitri Wulandari, The Jakarta Post, Jakarta<\/p>\n
The government has completed renegotiations with 26
\nindependent power producers (IPP), raising optimism that there
\nwill be no power crisis in the future.<\/p>\n
\"With the completion of the renegotiations with the IPP, we
\nare ready to move forward. There will be no more power crises
\nnext year as some of the IPP projects will enter the stream,\"
\nCoordinating Minister for the Economy Dorodjatun Kuntjoro-jakti
\nsaid in a hearing with House of Representatives Commission VIII
\nfor energy, environment and science and technology.<\/p>\n
Dorodjatun said the dispute with Karaha Bodas Company is the
\nonly case left to settle.<\/p>\n
\"The case is still under litigation by the legal
\nrepresentative of the Indonesian government and Pertamina. An out
\nof court settlement is being pursued by a facilitation team,\"
\nDorodjatun added, referring to the state oil and gas company
\nPertamina.<\/p>\n
Known as Tim Keppres 133, after the Presidential Decree No.
\n133\/2001 issued to establish the team, the team was tasked to
\nrenegotiate power purchase agreements (PPA) signed by state
\nelectricity company PLN and 27 IPPs prior to the economic crisis.<\/p>\n
The government put on hold many of the projects in late 1997
\nas part of the retrenchment program to cope with the economic
\ncrisis. PLN, which was financially troubled by the crisis, asked
\nto renegotiate the PPAs, especially with regards the price.<\/p>\n
Following the postponement of the project, some of the IPPs
\ndecided to file arbitration proceedings against PLN, Pertamina
\nand the government, while others were willing to renegotiate the
\ncontracts.<\/p>\n
PLN's president Eddie Widiono said PLN would save more than
\nUS$5.5 billion in costs thanks to the contractual renegotiations.<\/p>\n
Of the 26 IPPs, 14 IPPs agreed to continue their projects
\nunder a new pricing scheme, while seven agreed to terminate the
\nPPAs. The government and PLN each agreed to take over two
\nprojects, while Pertamina took over one project. The 26 IPPs have
\na combined power generation capacity of 10,615 megawatt.<\/p>\n
As for the seven terminated PPAs, Eddie said, the government
\nis likely to offer them to new investors.<\/p>\n
Of the 14 IPPs, who agreed to resume their projects, seven
\nprojects are still in process and are scheduled to be finished by
\n2006\/2007. The seven are Amurang power plant, Sibolga, Sibayak,
\nAsahan, Paiton I, Paiton II and Sengkang.<\/p>\n
According to Eddie, most of the 14 IPPs have agreed to sell
\ntheir power at an average of 4.6 U.S. cents per kilowatt per hour
\n(KwH) except for the diesel fired Pare-pare power plant in
\nMakassar at 5.7 U.S. cents and Paiton at 4.9 U.S. cents.<\/p>\n
Eddie did not disclose why Paiton would sell at a higher price
\nfor its power supply but in the case of the Pare-pare power
\nplant, Eddie said the price was higher because it used diesel
\nfuel.<\/p>\n
\"Diesel is more expensive than other types of fuel,\" he said.<\/p>\n
Legislator Priyo Budisantoso of the Golkar party praised the
\ncompletion of the renegotiation, while voicing concern that the
\nnew power price agreed upon with the IPPs were still higher than
\nthat of other Southeast Asian countries.<\/p>\n
\"It (the new price) is still not competitive. But it is better
\nthan the initial 8 U.S. cents per KwH. Thus, we appreciate the
\neffort,\" he said.<\/p>\n
Status of 27 IPPs<\/p>\n
Name Contract status<\/p>\n
1. Darajat Continued
\n2. Tanjung Jati A Terminated
\n3. Tanjung Jati C Terminated
\n4. Cilacap Terminated
\n5. Serang Terminated
\n6. Cilegon Terminated
\n7. Pasuruan Terminated
\n8. Paiton 1 Continued
\n9. Paiton 2 Continued
\n10. Pare-pare Continued
\n11. Sengkang Continued
\n12. Tanjung Jati B Continued
\n13. Salak Continued
\n14. Amurang Continued
\n15. Sibolga Continued
\n16. Palembang Timur Continued
\n17. Cikarang Continued
\n18. Asahan Continued
\n19 Sibayak Continued
\n20. Bedugul Continued
\n21. Cibuni acquired by PLN
\n22. Wayang Windu acquired by Pertamina
\n23. Sarulla acquired by PLN
\n24. Dieng acquired by government
\n25. Patuha acquired by government
\n26. Kamojang terminated
\n27. Karaha Bodas Under legal dispute<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-renegotiates-ipp-contracts-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
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