Government, PT Paiton reach power deal

A'an Suryana, The Jakarta Post, Jakarta

The government and independent power producer PT Paiton Energy have reached a final agreement on power purchasing prices for the Paiton I and Paiton II power projects.

Mahendra Siregar, from the Office of the Coordinating Minister for the Economy, said on Thursday the deal had been reached on Tuesday, a day before President Megawati Soekarnoputri officially relaunched 13 mega-projects, including the two Paiton power projects.

The agreement ends a four-year power contract dispute between PT Paiton Energy and state-owned electricity company PT PLN.

Mahendra said the government had agreed to pay the company 4.93 US cents per kilowatt hour (KWH) for the Paiton I project.

He, however, did not remember the exact purchasing price for the Paiton II project, but said "it is about 4.6 cents per KWH".

Paiton signed a contract with the government in 1994 to develop power generating units. According to the contract, PLN was to have paid Paiton 8.47 cents per KWH during the first six years, 8.21 cents per KWH from the seventh to 12th year, and 5.45 cents per KWH between years 13 and 30.

However, the 1997-1998 financial crisis, followed by the rupiah's plunge against the dollar, moved PLN to demand that the contract be renegotiated.

PLN is paid in rupiah by its customers, but must pay Paiton in US dollars.

The Paiton I power plant, which will be able to generate 1,230 megawatts of power, is one of 27 independent power plants in Indonesia.

Its presence is significant because the country is expected to require 15,441 megawatts and 16,916 megawatts in 2003 and 2004, respectively.