House questions granting of new power project to CEPA
JAKARTA (JP): PT Consolidated Electric Power Asia (CEPA) Indonesia has been granted a new power project in Jepara, Central Java in a deal which some House of Representative members have questioned.
In a House hearing with Minister of Mines and Energy I.B. Sudjana Thursday night, it was learned that CEPA had been awarded the new project, called Tanjung Jati C, in return for its willingness to lower the price of power for its first project, Tanjung Jati B, also in Jepara.
Legislator Fransiskus Skera of the dominant Golkar party told the hearing he found it strange the new project had been awarded on the back of a letter of recommendation from Minister/State Secretary Moerdiono.
"It looks unusual because the responsibility over the electricity sector is supposed to vest with the Minister of Mines and Energy," Skera said.
Skera quoted a letter from Moerdiono to Sudjana dated Aug. 14 as saying the government had approved the development of the coal fired Tanjung Jati C by CEPA.
But Sudjana said during the hearing he didn't feel bad about Moerdiono's letter. "I know that he (Moerdiono) did not have any ill intention (by sending the letter)."
CEPA had earlier been granted the license to develop two units of coal fired power plants in Jepara -- popularly known as Tanjung Jati B -- with a generation capacity of 1,320 Megawatts (MW).
But the pricing scheme of Tanjung Jati B's power created controversy because the power purchase agreement between CEPA and PLN, which was signed last October, set the power price at 6.45 US cents a kilowatt hour (KWh).
House members criticized the accord, demanding CEPA reduce the price to 5.74 cents, which is the level offered by the nearby Tanjung Jati A power plant.
The Tanjung Jati A plant is being developed by a consortium, including the Bakrie Group.
Sudjana has also called on PLN to renegotiate the price.
The criticism has delayed the implementation of Tanjung Jati B.
CEPA was initially 80 percent owned by Hong Kong's Hopewell Ltd and 20 percent by PT Impa, a company controlled by businessman Djan Farid.
Hopewell sold its 80 percent stake in CEPA Indonesia to the Southern Electric International Holdings, a subsidiary of the Atlanta-based Southern Company.
Reuters reported last month that CEPA had decided to quit the Tanjung Jati B power project due to a disagreement with PLN over the power price.
Skera told The Jakarta Post yesterday that Director General of Electricity and Energy Development Endro Utomo Notodisuryo had followed up Moerdiono's letter by granting a preliminary letter of approval to CEPA to develop the Tanjung Jati C power plant with a 1,320 MW capacity.
"This can be seen from his letter to Minister Sudjana dated Aug. 22, a copy of which was made available to me," Skera said.
Endro said in the letter that the Tanjung Jati C project was given to CEPA to reach a new pricing scheme for Tanjung Jati B power project.
The Tanjung Jati C power project will be located close to the US$1.77 billion Tanjung Jati B power plant.
Endro said in his letter to Sudjana that CEPA would be willing to reduce its power price to 5.73 cents per KWh if it was given the Tanjung Jati C project as well.
But Skera and some other House members said the new price offered by CEPA was still too high because a consortium led by Swiss company Asea Brown Bovery (ABB) had offered 5.3 cents per KWh if it was awarded the Tanjung Jati B and C projects. (jsk)