PLN complete renegotiation with 20 IPPs<\/p>\n
A'an Suryana, The Jakarta Post, Jakarta<\/p>\n
Financially-troubled state electricity firm PT PLN has
\ncompleted contract renegotiations with 20 independent power
\nproducers (IPPs), saying the deals will help ease its financial
\nburden.<\/p>\n
The company also expected to complete the renegotiations of
\nseven other remaining contracts in the middle of this year, said
\nJuanda Nugraha, the head of the firm's renegotiation team.<\/p>\n
\"The completion of the renegotiations will have a double
\nimpact. On one hand, it will ease PLN's financial troubles. On
\nthe other hand, it will help restore the country's reputation
\namong power investors,\" he told The Jakarta Post.<\/p>\n
He said all 20 IPPs had agreed to cut their power price to
\nbelow 5 US cents per kilowatt hour (kWh), which is lower than
\nPLN's current selling price of Rp 488 (5.42 cents) per kWh.<\/p>\n
Juanda said the six remaining contracts involved Wayang Windu,
\nSarulla, Kamojang, Bedugul, Karaha Bodas, Dieng and Patuha power
\nplants. All are geothermal power projects.<\/p>\n
PLN has been operating at a loss since the monetary crisis hit
\nin 1997. The sharp plunge of the rupiah against the green back
\ncost the firm dearly, because the company must purchase power
\nfrom the IPPs in U.S. dollars under the contract, while it sells
\nthe power to the public in rupiah.<\/p>\n
Last year, PLN booked financial losses of around Rp 4.47
\ntrillion.<\/p>\n
Under the take-or-pay clause of the contracts with the IPPs,
\nPLN has to pay the IPPs for the amount of power set in the
\ncontract, even if the state firm does not take the power
\nsupplies.<\/p>\n
The government suspended and reviewed most of the power
\nprojects in 1997 and urged PLN to renegotiate the contracts. This
\nled to long disputes between PLN and the IPPs.<\/p>\n
The government allowed the projects to resume last year amid
\nfears of a looming power crisis.<\/p>\n
Juanda said the latest contracts renegotiated by PLN
\npertained to the Asahan hydropower plant, the Sibayak geothermal
\npower plant and the Cibuni geothermal power plant.<\/p>\n
\"The contracts were successfully renegotiated in December last
\nyear.\"<\/p>\n
The renegotiation outcomes have been lodged with the
\ngovernment for approval, he said.<\/p>\n
He said the owner of the Asahan project agreed to drop its
\nprice to 4.6 cents per kWh, from 7 cents under the old contract,
\nwhile the owners of the Sibayak and Cibuni power projects had
\nagreed to cut is prices to 4.7 cents from 7 cents and to 4.45
\ncents from 7 cents respectively.<\/p>\n
Juanda said successful renegotiations would allow PLN to save
\nup to US$5 billion, but he did not provide reasons to justify his
\nclaim.<\/p>\n
Analysts said the IPPs had agreed to cut their prices in
\nreturn for compensation from PLN, including an extension of the
\ncontract period. Under the old contracts, PLN was obliged to buy
\npower from them for 30 years, but under the renegotiated
\ncontracts, the contract period had been extended up to 50 years.<\/p>\n
This means the contract renegotiations won't reduce PLN's
\nfinancial obligations to the IPPs, but will only allow PLN to pay
\nthe IPPs over a longer period.<\/p>\n
List of projects whose contracts have been renegotiated<\/p>\n
1. Paiton I,
\n2. Tanjung Jati B,
\n3. Paiton II,
\n4. Sengkang,
\n5. Sibolga A,
\n6. Amurang,
\n7. Palembang Timur,
\n8. Jawa Barat (Cilegon),
\n9. Pare-Pare (Suppa),
\n10. Pasuruan,
\n11. Cilacap,
\n12. Asahan,
\n13. Tanjung Jati A,
\n14. Tanjung Jati C,
\n15. Serang,
\n16. Salak,
\n17. Drajat,
\n18. Sibayak,
\n19. Cibuni,
\n20. Cikarang<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pln-complete-renegotiation-with-20-ipps-1447893297",
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"sponsor_url": "https:\/\/okusiassociates.com"
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