El Paso to open regional headquarters in Jakarta
El Paso to open regional headquarters in Jakarta
JAKARTA (JP): American power giant El Paso Energy
International has chosen Indonesia for the site of its Southeast
Asian regional headquarters despite the country's economic
uncertainties.
Company president John D. Hushon said here last Monday the
decision to open the regional headquarters in Jakarta was made in
the third quarter of last year.
The new headquarters office would be officially opened in the
next few weeks, he said.
"We are now inaugurating this office to indicate our major and
continuing commitment to Indonesia and we will be operating a
number of our other international projects in Southeast Asia from
Jakarta," Hushon said.
Hushon said El Paso chose Indonesia as its regional base in
view of the country's huge economic potential.
EL Paso was aware of the economic crisis currently facing the
country but the company was convinced that the country would be
able to overcome its problems, Hushon said.
"I and David (David Veiseh, company chief representative in
Indonesia) are consciously optimistic that six months from now
we'll look back and smile and say 'We are glad we stayed'" Hushon
said.
El Paso, based in Houston, bills itself as the world's largest
natural gas handling company.
It is active in 11 countries, distributing and processing
natural gases as well as operating gas-fired power plants. It
currently operates power plants throughout the world with a total
generation capacity of 4,000 Megawatts (MW).
According to Veiseh, El Paso has invested about $200 million
in Indonesia to develop the 135-MW combined cycle power plant in
Sengkang, South Sulawesi, and a number of small hydropower
projects -- popularly called minihydros.
El Paso owns a 47.5 percent stake in PT Energy Sengkang which
operates the Sengkang power plant, with its partner Energy Equity
of Australia holding 47.5 percent and PT Trihasra Sarana Jaya
Purnama of Indonesia 5 percent.
Energy Sengkang is the first of the 26 independent power
producers that have signed power purchase agreements with the
state electricity company PLN to come on stream. It began
operating last September.
Hushon said El Paso had allocated $500 million to build power
plants in Indonesia over the next four years but the realization
of the investment plan depended on the consistency in the
country's power policy.
"We initially put investment in Indonesia on top priority but
we later put it on the second priority after seeing the recent
development in the country's power policy," Hushon said.
Energy Sengkang is at present arguing with PLN over terms of
payment and PLN's desire to change the terms of the power
purchase agreement (PPA), which is based in dollars.
PLN buys power from Energy Sengkang at the pre-crisis
conversion rate of Rp 2,450 (27 US cents) per dollar, instead of
the current exchange rate as stipulated on the PPA. The rupiah
closed at Rp 8,800 against the U.S. dollar on Friday, slightly up
from Thursday's close of Rp 9,000.
PLN also wants to reduce the price of power and the volume of
power it has to buy, as stipulated in the PPA.
Under the PPA, PLN has to buy 80 percent of the Sengkang power
plant's capacity at $6.70 per kilowatt hour.
PLN says the current economic crisis has slashed its income so
much that it cannot afford power at the current exchange rate.
Hushon said negotiations between Energy Sengkang and PLN were
in progress and he was optimistic that the talks would bring
results agreeable to Energy Sengkang. (jsk)