ARCO says PLN is after all a good customer
ARCO says PLN is after all a good customer
JAKARTA (JP): The president of Atlantic Richfield Indonesia
Inc. (ARII), Leon Codron, has termed state electricity company PT
PLN a good customer despite the latter's failure to meet its
financial obligations.
Codron said PLN's controversial decision to pay its power and
gas suppliers, including ARII, at the precrisis rate of Rp 2,450
per U.S. dollar was understandable given the heavy impact of the
economic crisis on the company.
"This is not the customer's fault. This is the economic
crisis. We have a good customer. We have to work jointly to
resolve a headache like this," Codron said on Monday.
"I can tell you very frankly PLN has been a very good
customer. We very much appreciate what PLN has had to do. We work
with them in cooperation."
Cash-strapped PLN has refused to pay in full the independent
power producers (IPP) and gas producers for their power and gas
supplies, citing the toll from the crisis on its operations.
PLN, which gets revenue in rupiah but buys power and gas in
dollars, began paying its power and gas suppliers at the
precrisis rate in late 1997.
The rupiah traded at Rp 9,100 to the dollar on Tuesday.
A flood of criticism came in response to its measures, and
several lawsuits have been launched against the company for
breach of contract.
Codron also praised state gas distribution company PGN and
state fertilizer firm PT Petrokimia Gresik despite their failures
to fully pay ARII for its gas supplies.
ARII, a subsidiary of U.S. major energy company Atlantic
Richfield Company (ARCO), has signed contracts to supply PLN's
gas-fired power plants in Muara Karang and Tanjung Priok in
Jakarta and in Gresik Baru, East Java.
Under the contract, ARII supplies the Muara Karang power plant
with 1.04 trillion cubic feet (tcf) of natural gas at the flat
price of $2.45 per million British thermal unit (MMBTU) from 1994
to 2004.
It is supplying the Gresik power plant with 1.68 tcf of
natural gas at the flat price of $2.53 per MMBTU from 1993 to
2012.
Codron denied the allegation that the failure of PLN, PGN and
Petrokimia to fully pay ARII for its supplies had caused cash-
flow problems for the company and forced it to resort to layoffs.
He acknowledged ARII plans to reduce its workforce by about
1,000 in the near future, but said the measure was part of the
company's efficiency programs.
He said only companies with low costs could weather the
tighter competition in the world's oil and gas industry amid
collapsing prices of oil and the global recession.
Codron said the company had not yet received approval from
state oil and gas company Pertamina for the company's voluntary
retirement program.
He added that despite the retrenchment, the company would
maintain its exploration and production expenditures at about
$500 million, similar to expenditures in the areas in previous
years. (jsk)