House backs PLN move on tariffs
JAKARTA (JP): The House of Representatives Commission VIII for budgetary affairs supported yesterday PT Perusahaan Listrik Negara's (PLN) move to renegotiate power prices with private electricity companies.
Commission vice chairman Johny Alwi Banyo of the Golkar faction said at a hearing that the commission understood the financial difficulties the state-owned electricity company might face in buying the power based on existing tariff arrangements.
The commission, therefore, backed PLN's move to renegotiate the prices but called on the company to increase its efficiency to improve its ailing financial performance.
PLN president Djiteng Marsudi said he was very grateful for the support given by the commission and promised to continue to fight for the reduction of private power prices.
Minister of Mines and Energy I.B Sudjana instructed the state- owned electricity company to renegotiate the power prices from private companies to avoid bankruptcy.
According to existing contracts, PLN must pay between 5.7 U.S. cents to 8.4 cents per kilowatt hour for electricity from private firms.
The depreciation of the rupiah by over 50 percent against the U.S. dollar since early this year has made the prices no longer affordable for PLN.
Currently, PLN sells electricity to the public at an average Rp 170 (about 4.3 cents) per Kilowatt hour.
PLN has power purchase agreements with 29 companies.
Two of the private power plants have been connected to the PLN power grid: the 135-Megawatt (MW) Sengkang combined cycle power plant in South Sulawesi and the 165-MW Salak geothermal power plant in West Java.
The Sengkang power plant is owned by a consortium made up of Australia's Energy Equity and America's El Paso Energy International. The Salak power plant is jointly owned by the United States' Unocal Corp. and the Nusamba group owned by Muhammad Bob Hassan.
Another power plant scheduled to be connected to PLN's grid next year is the 1,230-MW Private Paiton I coal-fired power plant.
The power plant is jointly owned by the Mission Energy Company and the Capital Ind Power of the Netherlands, Paiton Power of Japan and PT Batu Hitam Perkasa. Batu Hitam is owned by Hashim Djojohadikusumo.
Power from the Sengkang plant was sold at 6.7 cents per Kilowatt hour, while power from the Salak plant was at 8.4 cents for the first 14 years and 4.9 cents for the next 15 years. Power from the Paiton plant was at 8.4 cents for the first six years, 8.2 cents from the seventh to 12th year and 5.4 cents from the 13th to 30th operation year.
Although PLN had paid Rp 16 billion for power from the Sengkang plant for two months of supply, Djiteng said PLN would go ahead with the effort to reduce the price.
Djiteng said he knew PLN was in a weak legal position in the renegotiation, but the company would use "political efforts" to make private power producers renegotiate their price.
"I shall not stop talking to the press and the House until they are willing to renegotiate. I will tell them: Would you feel comfortable doing business here if you always become a subject of political discussion in the House?" Djiteng said.
PLN's effort to renegotiate the price of private power has, however, caused growing concern among private power producers.
Some foreign publications have noted that the effort would taint Indonesia's investment credibility.
Most of the country's private power projects were awarded to a small number of conglomerates, foundations and politicians in consortia with foreign giant power companies. (jsk)