Investors welcome new electricity regulations

JAKARTA (JP): The government's new policy requiring private companies to set up joint ventures with subsidiaries of the state-owned electricity company PLN in developing power plants would not pose a problem to investors, an official said yesterday.

Firdaus Akmal, president of PT PLN Pembangkitan Listrik Jawa Bali I (PJB I), one of PLN's subsidiaries, said here yesterday that investors needed their involvement.

"They (the investors) are now searching for us because (they know) if they join with us they can at least minimize business risks," Firdaus said.

"They know PLN is the most experienced power plant operator in this country," he added.

Director General of Electricity and Energy Development Endro Notodisuryo said earlier the government had made a new policy to tie up with PLN's subsidiaries -- PT Pembangkitan Listrik Jawa Bali I or PT Pembangkitan Listrik Jawa Bali II -- in developing power plants in the country.

The equity participation of PLN's subsidiaries in private power companies is needed to ensure that private power generators will not set prices too high, Endro said.

The new ruling became effective in April this year.

The government also introduced a new ruling in which PLN will only sign an agreement to buy power from privately run coal-fired power plants at prices less than 6 U.S. cents per kilowatt hour (Kwh). The ruling became effective in April this year.

Firdaus said at least three investors had approached PJB I to form joint ventures to develop three separate power plants in the country.

"We target to own about 30 percent stake in any joint venture so that we can place our men in management," said Firdaus.

Firdaus promised that PJP I would fight for a "reasonable" price in its joint venture with private companies.

"The prices will be about 5.4 and 5.6 U.S. cents per Kwh for coal-fired power plants," he said.

PLN has signed 25 power purchase agreements with private power companies, under which PLN will buy power from them at prices of between 5.75 U.S. cents and 8 U.S. cents per kwh.

The Tanjung Jati A power plant which is under construction in Jepara, Central Java, sells its power at the lowest price of 5.74 U.S. cents per Kwh. In comparison, the Paiton I coal-fired power plant in East Java will sell its power at 8.56 U.S. cents in its first six years of operation.

PLN currently sells power to the public for 5.9 U.S. cents per Kwh. (jsk)