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)