Paiton energy plan to develop additional power plants

Paiton energy plan to develop additional power plants

Moch. N. Kurniawan, The Jakarta Post, Jakarta

PT Paiton Energy, the owner of the coal-fired Paiton I power
plant, is exploring the development of one or two additional
power units in Paiton, Probolinggo, East Java as part of its
expansion program.

Paiton Energy president Ronald P. Landry said late Wednesday
the two power units would generate between 650 and 700 megawatts.

The new power units will be built next to the existing plant.
The US$2.5 billion Paiton I power plant, which consists of two
power units, has a power generating capacity of 1,230 megawatts.

"Paiton has agreed with PLN to look into this development," he
told the Jakarta Post, referring the state-owned power monopoly.

He noted however the plan was still at a preliminary stage.

The company is still studying various aspects related to the
planned project, including, among other things, sources of
financing, legal matters, and the economics of the project.

He also said that it had yet had to come to an agreement with
PLN on the final pricing of the capacity and power to be provided
by the proposed plant.

PLN's president Eddie Widiono said earlier that Paiton Energy
had proposed to build the new power units as compensation for the
latter's readiness to lower the power price from its existing
plant.

Paiton and PLN reached a preparatory agreement last month,
under which PLN will pay 4.93 U.S. cents per kilowatt hour over
40 years to Paiton Energy for power from Paiton I.

PLN will also pay US$4 million per month for 30 years (a total
of $1.44 billion throughout the period) in "restructuring costs",
which include arrears and other claims.

Both sides have been negotiating for years to resolve the
dispute over prices after PLN complained the price set in their
original contract was too high. The contract was signed in 1994.

Paiton Energy is one of 27 independent power producers (IPPs),
which has signed power purchase contracts with PLN.

PLN sells its electricity in rupiah, while it has to pay power
from IPPs in U.S. dollars.

Paiton Energy is owned by U.S-based energy firm Edison Mission
Energy, another U.S giant GE Capital, Japanese company Mitsui &
Co and local company Batu Hitam Perkasa, which is controlled by
businessman Hashim Djojohadikusumo.