Paiton Energy offers lower power price from new project

The Jakarta Post, Jakarta

Independent power producer PT Paiton Energy said on Friday it had proposed a lower price to state electricity company PT PLN for electricity supplied by its new unit.

President director of Paiton Energy Ronald P. Landry said after negotiations with PLN, the company agreed to sell power from Paiton I power plant in East Java at 4.57 U.S. cents per kilowatt hour (KwH) from an initial proposed price of 4.79 U.S. cents.

" Our (new) proposed price of 4.57 U.S. cents per KwH completely complies with PLN's requirements for the expansion. This shows that our sponsors are willing to make a substantial investment in Indonesia," Landry said in a press release.

However, Landry said PLN had yet to respond on the company's offer.

Earlier, Landry had given his assurance that the rate would not escalate within the next 15 to 20 years, and was expected to help PLN make a profit and maintain power supplies.

Paiton Energy is constructing an additional power generating unit with a capacity of 800 megawatts (MW) to its existing 1,290 MW coal-fired power plant in East Java amid growing electricity demand in the country.

Construction of the new unit will begin in early 2005 after completing some legally binding contracts and terms with the government, and the project is expected to be completed in 2008.

The expansion project is estimated to cost US$580 million.

Landry said the expansion would result in a substantial new investment in the Indonesian power sector as declining investment in the power sector could not fulfill growing demand.

The new project is expected to produce 8,000 new construction jobs and have a huge impact on the East Java economy, Landry added.