Jawa Power seeks U.S. 5 cents/kwh electricity rate from PLN
Jawa Power seeks U.S. 5 cents/kwh electricity rate from PLN
SINGAPORE (Dow Jones): Indonesian independent power producer PT Jawa Power is seeking around 5 U.S. cents a kilowatt-hour, or kWh, in long-term contract negotiations for electricity generated by a 1,220-megawatt plant in East Java, up from 3 cents/kWh agreed in an interim contract.
Ralf Lucht, president and director of Jawa Power, told Dow Jones Newswires that a rate of 5 cents/kWh is required so investors can start repaying loans for the US$1.7 billion Paiton- II project.
The rate agreed in the interim contract with Perusahaan Listrik Negara, or PLN, a state-owned electricity company, falls short of covering loan payments and shareholders' dividends, Lucht said.
Jawa Power recently extended the interim agreement originally covering the first-half of 2001 to the end of October, with a marginal increase of 2 percent - 3 percent in the rate for electricity delivered in the July-October period, he said.
While Jawa Power hopes to see new long term rates in effect from November, it is ready to further extend the interim agreement if necessary, Lucht said.
But the interim rate only covers interest payments and partial operation and maintenance costs of the Paiton-II power project, he said.
Jawa Power - 50 percent-owned by Germany's Siemens Power, 35 percent by the UK's PowerGen PLC., and 15 percent by local company PT Bumipertiwi Tatapradipta - is scheduled to start payments on principal of its capital loan in January 2002.
The rate of 5 cents/kWh sought by Jawa Power is 16.6 percent below the level PLN is contractually obliged to pay under the original power purchasing agreement, Lucht said.
Acting on "goodwill," Jawa Power agreed to revise its selling price down, but hopes to maintain a level that it deems economical for its shareholders to continue operations in Indonesia, he said.
PLN, however, is hoping to achieve a rate below 5 cents/kWh, as subsidized electricity tariffs in Indonesia remain among the lowest in Southeast Asia.
The state company has identified Pation-II as one of the "big- three" projects it is focusing on, PLN finance director Parno Isworo said late Monday.
Parno acknowledged the urgency of finalizing the ongoing negotiations, so that new investors can be drawn to develop the power generating capacity needed to avoid serious shortages projected by 2003.