PLN urged to negotiate private power prices<\/p>\n
JAKARTA (JP): Minister of Mines and Energy I.B. Sudjana
\nordered state-owned electricity company PLN to renegotiate with
\nprivate power companies over prices following the rupiah's sharp
\ndepreciation against the U.S. dollar, company president Djiteng
\nMarsudi said yesterday.<\/p>\n
Djiteng said the order was given because PLN could no longer
\nafford private power at prices settled in dollars before the
\nmonetary crisis beset the region.<\/p>\n
"PLN will go bankrupt if it has to buy power at such prices in
\nthe future," Djiteng said.<\/p>\n
PLN's power purchase contracts with private companies are set
\nin dollars, while PLN earnings are entirely in rupiah.<\/p>\n
PLN signed power purchase agreements with 29 private power
\ncompanies with the last agreement signed with PT Power Jawa Barat
\nin June, one month before the monetary crisis started.<\/p>\n
The price of private power, especially from coal-fired plants,
\nhas sparked controversy from the outset as analysts and House
\nmembers dismissed it as too expensive.<\/p>\n
Private coal-fired power plants have set prices ranging from
\n5.74 U.S. cents to 8.46 cents per kilowatt hour (kwh) with the
\nTanjung Jati A power project in Central Java being the only one
\nto offer prices below 6 cents per kwh.<\/p>\n
The rupiah rate was between Rp 2,300 and Rp 2,400 to the
\ndollar when the purchase agreements were signed, but the rupiah
\nhas lost about 32 percent of its value since July, closing at Rp
\n3,550 to the dollar yesterday.<\/p>\n
Analysts say PLN has to raise the price of its power by more
\nthan 32 percent from the current average price of Rp 165 per kwh
\nto cover the cost of private power.<\/p>\n
However, observers foresee the public not accepting such a
\nprice hike.<\/p>\n
Djiteng said PLN had been renegotiating with several private
\npower companies to follow up on Sudjana's order.<\/p>\n
He said PLN not only asked for lower prices during the
\nrenegotiations but also demanded 15 percent of profits earned by
\nprivate power plants. He did not specify the amount of prices
\nproposed.<\/p>\n
Djiteng did not say which companies PLN was renegotiating
\nprices with.<\/p>\n
Captive power<\/p>\n
As part of the rescheduling policy issued last month, the
\ngovernment has postponed 13 of 29 private power projects which
\nhad signed power purchase agreements with PLN, put six others
\nunder review and allowed ten others to continue.<\/p>\n
Djiteng said earlier that PLN had projected that it could lose
\nat least Rp 1.5 trillion ($421.3 million) next year due to the
\nrupiah's depreciation.<\/p>\n
He said the company was burdened by the depreciation as it had
\nto pay most of its debt in dollars, while earnings were in
\nrupiah.<\/p>\n
Also, it had to bear additional costs with a possible increase
\nin gas and diesel fuel prices, which PLN had to buy in dollars as
\nwell.<\/p>\n
Sudjana said among measures to be taken by the government to
\nhelp PLN solve its financial problems was to limit the
\ndevelopment of captive power.<\/p>\n
Such a measure would help PLN improve its access to the large
\nmarket potential in the industrial sector, Sudjana said.<\/p>\n
Government data shows that there are 9,000 megawatts (MW) of
\ncaptive power plants in Indonesia, mostly owned by industrial and
\ncommercial companies.<\/p>\n
But a source at PLN said the country's captive power plants
\ngenerated up to 16,000 MW, higher than PLN's generation capacity
\nof 15,940 MW.<\/p>\n
The source said owners of captive power plants enjoyed most of
\nthe government's fuel subsidies as they only had to pay Rp 380
\nper liter of diesel fuel to state-owned oil and gas company
\nPertamina, compared to the international market price of Rp
\n1,100.<\/p>\n
The source said a power plant needed 0.3 liters of diesel to
\ngenerate 1 kwh power. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pln-urged-to-negotiate-private-power-prices-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}