PLN, IPPs reach agreement on power prices<\/p>\n
JAKARTA (JP): Financially troubled state electricity company
\nPT PLN announced on Wednesday that it had reached agreements with
\nthree independent power producers (IPPs) regarding alterations in
\nthe terms of their power purchase contracts, particularly focused
\non price issues.<\/p>\n
The three IPPs are PT Energy Sengkang, which has built a power
\nplant in the Sengkang area of South Sulawesi; PT Jawa Power,
\nwhich has built the Paiton II power plant in Probolinggo, East
\nJava; and Japanese-based firm Sumitomo, who are constructing the
\nTanjung Jati B power plant in Jepara, Central Java.<\/p>\n
PLN president Eddie Widiono said PLN and Sengkang had signed
\non April 12 a preliminary agreement confirming changes to the
\nterms of their power purchase agreement (PPA).<\/p>\n
\"A final agreement is expected to be signed in June at the
\nlatest,\" Eddie was quoted by Antara as saying, following a
\nseminar on deregulation and restructuring of the power sector in
\nthe South Sulawesi capital Makassar.<\/p>\n
Under the preliminary agreement, Sengkang will charge PLN
\n4.286 U.S. cents per kilowatt hour (kWh) for power supplies from
\nits 135-Megawatt (MW) power plant. PLN must also pay an
\nadditional charge of 0.132 cents per kWh for the use of
\ntransmission facilities built by Sengkang.<\/p>\n
Under the original PPA signed in 1996, PLN agreed to pay
\nSengkang 6.7 cents per kWh.<\/p>\n
In addition to the 135-MW power plant it had built, Sengkang
\nhad agreed to construct another power facility, with the capacity
\nof 51 MWs between 2003 and 2005, in order to meet expected
\nincreases in power demand in the province.<\/p>\n
\"With this deal, power supplies for South Sulawesi can be
\nsecured until 2005,\" he said.<\/p>\n
According to Eddie, the deal will enable PLN to save around
\n$200 million in power purchasing costs.<\/p>\n
The Sengkang power plant is 47.5 percent owned by Energy
\nEquity, 47.5 percent by El Paso Energy International, while the
\nremaining 5 percent is held by PT Triharsa Sarana Jaya Purnama, a
\ncompany partly owned by former president Soeharto's daughter,
\nSiti Hardijanti Rukmana.<\/p>\n
Sengkang is one of the 27 IPPs which signed a PPA with PLN in
\nthe mid-1990s.<\/p>\n
However, the economic crisis which hit the country in 1997
\ncrippled PLN's capability to buy power at the price set in the
\nPPAs.<\/p>\n
Under the PPAs, PLN must purchase electricity from the IPPs in
\nU.S. dollars, which tripled in value against the rupiah due to
\nthe rupiah's sharp depreciation.<\/p>\n
PLN has since been trying to renegotiate the PPAs and has
\nalready canceled some projects.<\/p>\n
Eddie also announced on April 12 that PLN had signed a
\ntemporary agreement with Jawa Power, renegotiating the price of
\npower supplies from the latter's power plant for six months.<\/p>\n
According to him, throughout the six-month period, PLN will
\npay Jawa Power 3 cents per Kwh if it operates at 80 percent
\ncapacity and 4.86 cents if it operates at 40 percent capacity.<\/p>\n
Under the PPA signed in 1995, Jawa Power, which has built a
\n1,220-MW power plant, agreed to sell its power to PLN at the
\nprice of 6.59 cents per Kwh.<\/p>\n
According to PLN's data, Jawa Power is 50 percent owned by
\nGerman firm Siemens Power, 35 percent by British firm PowerGen
\nPlc while the remaining 15 percent shares are held by PT
\nBumipertiwi Tatapradipta, which is linked to Soeharto's son
\nBambang Trihatmodjo.<\/p>\n
Eddie said the temporary agreement will enable PLN to save
\nabout $45 million in purchasing costs.<\/p>\n
He said PLN had also agreed to buy power from the Tanjung Jati
\nB power plant in Central Java, construction of which would be
\ncompleted by Japanese firm Sumitomo, under a \"lease and transfer\"
\nscheme.<\/p>\n
\"The firm will build a coal-fired power plant with the
\ncapacity of 1,200 MW, with construction expected to be completed
\nin 2004,\" Eddie said.<\/p>\n
He said that PLN would operate the power plant, paying a fee
\nof between 2.2 cents and 3.3 cents per kWh to Sumitomo.<\/p>\n
The Tanjung Jati B power project was initially owned by PT HI
\nPower Tubanan, which is a joint venture of Hong Kong's firm
\nHopewell Holdings Ltd (80 percent) and local firm Impa Energy (20
\npercent).<\/p>\n
Eddie did not elaborate as to why the project had been
\nacquired by Sumitomo. (03)<\/p>",
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