House blasts govt over power policy

House blasts govt over power policy

JAKARTA (JP): The House of Representatives noted that the
government's decision to open up only the base category of power
generation to private investors is unfair.

"Why don't we offer also the medium and top categories to
private investment?" Iskandar Mandji, a House member, contended
during a hearing between the state-owned power companies and the
House Commission on Industry, Mining, Manpower and Investment.

Currently, only power generators PT Pembangkitan Listrik Jawa
Bali I (PJB I) and PT Pembangkitan Listrik Jawa Bali II (PJB II),
subsidiaries of the State Electricity Company (PLN), operate
power plants of the three categories.

Power plants of the base category are considered the most
profitable ones because they can utilize their production
capacity up to 100 percent. The plants in this category should
operate continuously.

Unlike the base category, power plants of the medium category
can produce at 50 percent of their capacity, while the plants of
the top category operate for only a few hours a day.

By the year 1998, however, several independent power producers
will start their operations.

"When the private generators begin their operations,
electricity production of the base category will be supplied by
PJB I and II and private producers," PJB II's president, Ady
Satriya, said.

Satriya said that under the current system known as the
General Guideline of National Electricity, private players are
allowed to invest in the base category.

"I don't know exactly the rationale of the government's
decision to open only the base category to private players. Maybe
it was because the base category provides business certainty," he
added.

Participation

Satriya, however, argued that the participation of private
companies in the base category is fair enough, as long as the
market share in that category is allocated proportionally to PJB
I, PJB II and private companies.

PJB I's president, Firdaus Akmal, said that PJB I and II
currently produce 5,600 megawatts of the base category.

He said that the government has estimated a 15 percent annual
growth of electricity demand in the next five years. PJB I and
PJB II will take one third of the growth, while private producers
will take the remaining two thirds.

"The problem is how to allocate the supply if the growth is
below the prediction. In this regard, we have yet to get clear
guidance from PLN," Satriya said.

PLN is the country's single buyer and distributor of
electricity.

The commission said that it can accept private investors'
participation in the generation of electricity, but such a move
is not fair if it fails to boost the performance of state-owned
companies.

"Why should we approve PLN's investment proposal if you (PJB I
and PJB II) can not increase your sales," Mandji contended.

Firdaus revealed that PJB I has projected to sell up to 31.5
billion kilowatt hours (kWh) next year or only 58 percent of its
total production capacity, which stood at 54 billion kWh.

PJB I's production capacity is projected to increase to 58.3
billion kWh by 2000, but sales are projected to grow only to 41.2
billion kWh.

Chairman of the commission Budi Hardjono said that the
commission will bring the issue to another hearing with PT PLN as
the holding company of PJB I and II, because the management of
the two companies might not have the authority to answer the
House's questions.

In line with the debut of private power producers, the House
members also called for a standardization of electricity selling
prices to PLN.

The commission questioned whether PJB I and II, which
currently are being prepared to go public next year, will be able
to compete with private companies if PLN set up different prices.

Satriya confirmed that like private companies, PJB I and II
are now looking for long-term contracts for power purchases with
PLN.

"One of the barriers to our planned initial public offering is
the absence of a long-term contract with PLN," Firdaus
acknowledged.

Firdaus said that PJB I and PJB II currently sell electricity
to PLN at Rp 82 (3.5 U.S. cents) per kWh and Rp 71 per kWh
respectively.

In contrast, Paiton Energy Co. was reported to have concluded
a long-term contract to sell electricity to PLN at 8.56 U.S.
cents in the first six years of its operation.

Consolidated Electric Power Asia in Indonesia, which will
operate the Tanjung Jati B power plant, set a selling price of
7.66 U.S. cents for the first six years. (alo)