PLN set to rehash contract terms with all IPPs<\/p>\n
JAKARTA (JP): Cash-strapped state electricity company PT PLN
\nsaid on Tuesday it would soon invite independent power producers
\n(IPPs) to renegotiate their power purchase contracts in the
\ndispute simmering between the two in the past year.<\/p>\n
PLN president Adhi Satriya said in a statement that PLN would
\ninvite the 27 IPPs involved in power purchase agreements (PPA)
\nfor discussions on mutually acceptable and equitable solutions to
\nthe contractual dispute.<\/p>\n
"PLN and the government of Indonesia intend to observe their
\nobligations and protect their rights under the contracts," Adhi
\nsaid.<\/p>\n
"The gravity of the situation dictates that PLN and IPPs and
\nother stakeholders will need to look beyond the contracts and be
\nflexible and willing to take innovative initiatives to resolve
\nthe problem. In carrying out this process, the interest of the
\npeople of Indonesia must be kept paramount."<\/p>\n
Adhi, who preferred use of the term "rationalization" over
\nrenegotiation in his statement, did not detail the schedule.<\/p>\n
He earlier promised to commence the renegotiation this month,
\nindicating that PLN would seek to cut the price of power supplied
\nby IPPs to about 4 U.S. cents from between 6 U.S. cents and 8
\nU.S. cents per kilowatt hour (kwh) in a bid to relieve its
\nfinancial difficulties.<\/p>\n
PLN has refused to pay IPPs in full as a result of financial
\ndifficulties stemming from the monetary crisis now more than a
\nyear and a half old. PLN sells power in rupiah but pays most of
\nits expenses in dollars, including the purchase of power from
\nIPPs.<\/p>\n
The company is only willing to purchase power from IPPs at the
\nprecrisis exchange rate of Rp 2,450 per dollar. The rupiah has
\nbeen ravaged in the past year, dropping to a record low of 17,000
\nto the U.S. dollar in January. It has gradually recovered in the
\npast few months, rising to a range of 7,500 and 8,000.<\/p>\n
The government has also postponed several IPP projects as part
\nof the retrenchment effort to cope with the crisis.<\/p>\n
Two IPPs have sued PLN and the Indonesian government for
\nbreach of contract.<\/p>\n
President B.J. Habibie has formed a ministerial task force
\nheaded by Coordinating Minister for Development Supervision and
\nState Administrative Reforms Hartarto to solve PLN's problems,
\nincluding its financial dispute with IPPs.<\/p>\n
Adhi said PLN's team for contract renegotiation had been
\nexamining all contracts and considering different options to
\nsolve the contractual dispute over the past three months under
\nthe supervision of the ministerial task force.<\/p>\n
Adhi said the renegotiation was expected to create a safe,
\nreliable and affordable supply of electricity for PLN and the
\npublic and promote development of the country's power sector.<\/p>\n
The renegotiation will be carried out fairly and
\ntransparently, he added, in accordance with the government's
\npolicy of restructuring the country's power sector.<\/p>\n
"Multilateral institutions like Asian Development Bank (ADB)
\nand World Bank have also acknowledged the urgent need to solve
\nthe IPP problems," Adhi said. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pln-set-to-rehash-contract-terms-with-all-ipps-1447893297",
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"sponsor": "Okusi Associates",
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