Kuntoro imposes 'high' power price for Freeport

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto has set a price of 9 U.S. cents per kilowatt hour (kwh) for power generated by PT Puncakjaya Power for mining company PT Freeport Indonesia.

Kuntoro set the price, higher than general industrial power prices, in a letter dated April 29 addressed to Puncakjaya Power, a copy of which was made available to The Jakarta Post yesterday.

"The price is only applied for the power supplied by PT Puncakjaya Power to PT Freeport Indonesia Company," Kuntoro wrote in the letter.

"If there is a change in the power price in the future, a new decree will be made on the basis of the agreement between Puncakjaya and Freeport."

The price level is higher than the power price set by the Independent Power Producers (IPPs) for state electricity company PLN, ranging between 5.74 cents and 8.4 cents per kwh.

PLN has claimed the power prices are too high, and it has made moves to renegotiate with the IPPs on the prices.

PLN has been severely battered by the economic crisis because it gets revenue in rupiah but a considerable amount of its costs, including the purchase of power from IPPs, is in U.S. dollars.

A spokesman for Freeport expressed no qualms about the price yesterday.

"The price was agreed upon by Freeport and Puncakjaya during the negotiation. The minister only approved our agreement," the company's manager of public affairs, Edward Pressman, told the Post.

He said Puncakjaya was owned by a consortium led by Duke Energy of the U.S.

The power company has supplied Freeport's base of Tembagapura, Irian Jaya, with power from its 195 megawatt (MW) coal-fired power plant at the port of Amamapare -- about 45 kilometers from Tembagapura -- since 1994.

"It is a remote area. Puncakjaya should pay a high power generation cost," Pressman said, adding that the company obtained its coal from Kalimantan.

Freeport, an affiliate of the U.S. Freeport McMoran Copper and Gold, is the country's largest mining company, producing gold and copper. It has been operating in the country since the 1960s. (jsk)