House backs PLN move on tariffs
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)