PLN undecided on power buying deal with CEPA<\/p>\n
JAKARTA (JP): State-owned electricity company, PT Perusahaan
\nListrik Negara (PLN), has yet to decide if it will buy
\nelectricity from the Tanjung Jati \"B\" power plant at a price
\nlower than initially agreed upon.<\/p>\n
PLN's director for planning P. Sihombing confirmed that the
\ncompany has received a proposal from the plant's contractor, PT
\nConsolidated Electric Power Asia (CEPA) Indonesia, offering to
\nsell electricity from the Tanjung Jati \"B\" power plant to PLN at
\nUS$0.0645 per kilowatt hour (kWh), or $0.009 lower than the
\n$0.0735 initially agreed upon in 1994.<\/p>\n
However, he said, the issue cannot be dealt with immediately
\nas PLN is waiting for government approval of its intention to
\ncancel its power purchasing agreement with CEPA.<\/p>\n
PLN's proposal is currently in the hands of President
\nSoeharto, Sihombing said.<\/p>\n
\"CEPA, as the contractor of the Tanjung Jati 'B' power plant,
\nis free to propose a price reduction, but we have not come up
\nwith a decision because our proposal to end PLN's power
\npurchasing agreement with CEPA is now being processed by the
\ngovernment,\" he said, as quoted by Antara.<\/p>\n
He declined to explain the basis of PLN's proposal to cancel
\nthe power purchasing agreement, in which the contractor will
\noperate the plant under a build-operate-and-transfer scheme.<\/p>\n
Earlier reports, however, said that PLN regarded the price
\noffered by the Hong Kong-based CEPA -- $0.0735 per kWh -- as too
\nhigh.<\/p>\n
By comparison, the Sibolga \"A\" power plant is expected to sell
\nits electricity to PLN at $0.0655, and the Paiton II power plant
\nat $0.066 per kWh.<\/p>\n
Reports also said that the construction of the 1,300-megawatt
\nTanjung Jati \"B\", to be located in Jepara, Central Java, was also
\nconsidered too expensive, with investments reaching as high as
\n$1.77 billion.<\/p>\n
By comparison, the Tanjung Jati \"A\" steam-powered plant --
\nwith a similar capacity -- was built with $1.66 billion.<\/p>\n
Apart from that, PLN also appeared disappointed with the
\ndecision by CEPA to move the site of the Tanjung Jati \"B\" plant
\nfrom the initially-agreed upon location of Bondo village in the
\nJepara regency.<\/p>\n
The reports said CEPA faced problems in land appropriation in
\nthe village, forcing it to shift to Tubanan village in the same
\nregency. In the latter village, however, CEPA reportedly faced
\nnew problems as the land is productive agricultural land.<\/p>\n
Despite the problems, CEPA President Djan Faridz was
\nconfident that construction would go smoothly at the Tanjung Jati
\n\"B\" plant in Tubanan village, which is slated for completion by
\nthe end of 1998.<\/p>\n
Djan said Sumitomo Ltd. has been appointed the main contractor
\nfor the project while funding will come from Sumitomo and a
\nsyndication of seven banks, led by Citibank.<\/p>\n
Djan considered the electricity price offered by CEPA was not
\nexpensive, given that his company had already proposed to cut
\nback the selling price to $0.0645 per kWh.<\/p>\n
\"This reduction will help PLN save $87.46 million,\" he said.<\/p>\n
He said the reduction was possible since the income tax had
\nbeen cut down from 35 percent to 30 percent. CEPA, he added, was
\nalso able to cut back on other costs. (pwn)<\/p>",
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