PLN renegotiates deals with IPPs<\/p>\n
JAKARTA (JP): President of state electricity company PT PLN
\nAdhi Satriya said on Tuesday renegotiations would soon get
\nunderway with independent power producers (IPP) on power purchase
\nagreements.<\/p>\n
\"We have sent letters calling on the IPPs to prepare for the
\nrenegotiations. We've even invited one of them -- the owner of
\nthe Sengkang gas-fired combined cycle power plant -- for the
\nrenegotiation later this month,\" Adhi said on the sidelines of a
\nhearing with House of Representatives' Commission V with
\nauthority including mines and energy.<\/p>\n
\"Thus, the renegotiation has technically started.\"<\/p>\n
The 135-megawatt Sengkang power plant located in South
\nSulawesi is owned by PT Energy Sengkang, a joint venture of
\nAmerica's EL Paso, Australia's Energy Equity and Triharsa Sarana
\nJaya Purnama.<\/p>\n
Sengkang came on stream in late 1997, the first to operate of
\nthe 27 IPPs with agreements with PLN.<\/p>\n
Adhi said his firm prioritized renegotiating with 10 of the
\nfirms which had either started or completed physical construction
\nof their projects.<\/p>\n
They include the coal-fired Paiton I and Paiton II power
\nplants, both in Probolinggo, East Java; the Drajat geothermal
\npower plant in West Java; the Salak geothermal power plant in
\nWest Java; the Tanjung Jati B coal-fired power plant in Central
\nJava, and the Pare-Pare diesel power plant in South Sulawesi.<\/p>\n
PLN is seeking renegotiation of the contracts to ease its
\nfinancial burden amid the monetary crisis. The rupiah's sharp
\ndepreciation against the dollar has severely affected the firm's
\nfinancial performance since it obtains revenues in the rupiah but
\npays most costs, including for power supplies from the IPPs, in
\nthe dollar.<\/p>\n
In the renegotiation, Adhi said, PLN would ask the firms to
\nreschedule their power projects in line with national demand,
\nreview prices in accordance with international prices and also
\nreexamine contractual terms to provide mutual benefit.<\/p>\n
Adhi said he would head the team of negotiators along with the
\nfirm's planning director Hardiv Situmeang.<\/p>\n
They will be supported by national and international advisors
\non financial and legal matters.<\/p>\n
Adhi estimated the renegotiation would take two years and
\ncould cost PLN US$10 million.<\/p>\n
Price hike<\/p>\n
PLN has also requested government permission to raise its
\npower prices by 18 percent starting from October to help its
\nfinancial recovery, Adhi said.<\/p>\n
He said the government was still considering the proposal.<\/p>\n
\"The rise in power prices would enable PLN to reach a set
\nfinancial target and ease its financial burden.\"<\/p>\n
A government rejection would force the firm to continue its
\ndependence on government subsidization of its operation. The
\ngovernment would also be required to help the company restructure
\nits Rp 31.8 trillion ($3.61 billion) debt.<\/p>\n
According to PLN's financial director Parno Isworo, the
\ngovernment would need to increase its subsidy to Rp 3.5 trillion
\nthis year from Rp 1.3 trillion last year if a price hike was
\ndenied.<\/p>\n
Adhi said PLN projected its net loss to decrease to Rp 1.728
\ntrillion this year from the 1998 figure of Rp 7.215 trillion.<\/p>\n
He did not mention whether the projected decrease in the loss
\nfor this year was contingent on the power price increase.<\/p>\n
He said PLN's operating income was projected to increase by
\n20.5 percent to Rp 16.371 trillion this year from Rp 13.581
\ntrillion in 1998.<\/p>\n
Payment for power supplies from IPPs was projected to drop to
\n1.178 trillion this year, from Rp 2.539 trillion.<\/p>\n
Payment for fuel was projected to increase to Rp 9.218
\ntrillion from Rp 7.931 trillion last year. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pln-renegotiates-deals-with-ipps-1447893297",
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