Fri, 10 Sep 1999

PLN agrees with Japan on loan for plant buyout

By Johannese Simbolon

NUSA DUA, Bali (JP): State-owned electricity company PT PLN said on Thursday it had reached a preliminary agreement with the Japanese government over a US$1.15 billion soft loan that would be used by the company to buy out the Tanjung Jati B power plant in Jepara, Central Java.

"We have reached a preliminary agreement. We expect the Japanese government to make a final decision on the loan next month," PLN president Adhi Satriya told reporters on the sidelines of the Indonesian International Oil and Gas Exhibition and Conference here.

He said under the agreement, Indonesia would receive the 40- year loan with a grace period of 10 years and an interest rate of 1 percent per year.

The 1,320 Megawatt power plant is owned by PT HI Tubanan Power, a joint venture between Hopewell of Hong Kong and local company PT Impa Energy. Impa is owned by businessman Djan Farid, who is linked with former president Soeharto's daughter Siti Hardiyanti Rukmana.

PLN has gained support from the House of Representatives for its plan to buy out the plant but drew protests from some legislators and public leaders.

Former PLN president Djiteng Marsudi has called on PLN to cancel the plan, saying it would be better for the company to use the loan to provide more power to people in rural areas.

Djiteng also said PLN did not need to buy the power plant, given the power oversupply in the country amid the economic crisis.

But Adhi defended the plan, saying the buyout would enable PLN to cut the power price from the power plant from 6.4 US cents per kilowatt hour to 2.3 cents.

PLN is holding negotiations with 27 independent power producers (IPPs) to cut the prices of their power supply.

PLN, which sells power in rupiah and buys power from IPPs in dollars, has been gravely affected by the sharp depreciation of the rupiah to the dollar since mid-1997.

Medco

Meanwhile, national oil and gas company PT Medco Energy Corporation called on PLN on Thursday to pay $11 million in arrears for the natural gas supply to the state-owned company's Tanjung Batu power plant in Kutai, East Kalimantan.

Medco president John S. Karamoy said PLN had not paid the power plant for its gas supply from the Sanga-Sanga gas field in East Kalimantan for the past 14 months.

The 60 Megawatt power plant is the main supplier of power to East Kalimantan.

He warned that Medco would stop supplying natural gas to the power plant if PLN still refused to pay for the gas supply in two months.

"If PLN does not make any payment in two months, we won't have any alternative but to stop the gas supply.

"We will be in financial difficulty if we continue gas production at the field and supply it to the power plant," Karamoy said.

He said PLN would be forced to stop supplying power to more than 50 percent of its customers in the towns of Samarinda and Balikpapan if Medco stopped its supply.

Medco earlier threatened to stop the gas supply last Aug.18 but it revoked the threat after the Minister of Mines and Energy stepped in to settle the dispute.

Medco agreed to reduce the price of its gas supply to Rp 15,000 (about $2) per million British thermal unit (MMBTU) from $3.

Yet Medco did not receive any payment from PLN, Karamoy said.

"Our case is ironic in view of PLN's efforts to get a loan from Japan to buy out the Tanjung Jati B power plant," Karamoy said.

When asked for comments on Medco's complaints, Adhi said he did not know the details of the case.

"You know that PLN has a lot of debts," he said.