PLN, foreign firms to form joint ventures

JAKARTA (JP): State-owned electricity company PT Perusahaan Listrik Negara (PLN) plans to form joint ventures with seven foreign companies to build several power plants, PT PLN's President Djiteng Marsudi said yesterday.

"We are now negotiating with them. We hope to reach some deals next year," Djiteng told The Jakarta Post after attending a celebration marking PLN's 50th anniversary.

Djiteng said that his company had signed memorandums of understanding with seven foreign companies, comprising Southern Electricity International of the United States, Utrecht NA of the Netherlands, China Light Power Ltd of Hong Kong, Electricite de France, Hydro Electricity Quebec of Canada, National Power and National Grid of Britain.

He said the power plant projects currently under negotiation with the foreign companies are to be built in West and Central Java, Sumatra and Kalimantan.

Djiteng said that PLN needs an average investment of Rp 10 trillion (US$4.4 billion) per year to build new power plants.

He said that new plants to be built by PLN in Java and Bali will be operated by PLN's subsidiaries, PT Pembangkitan I and PT Pembangkitan II.

PLN set up on Oct. 3 two subsidiaries, called PT Pembangkitan I and PT Pembangkitan II with a total authorized capital of US$9.88 billion, to manage its power plants in Java and Bali.

Djiteng said that PLN will never sell any shares of its subsidiaries to foreign companies through direct placement.

"The subsidiaries will instead float their shares on international and domestic stock exchanges in April 1997," he said.

Asked about the prices of electricity from private generators, Djiteng said that PLN will negotiate with the private companies to obtain the lowest possible prices for consumers.

"We are ready to negotiate directly with private companies if the government gives us full authority, but up to now we have not been granted such authority," he said.

Earlier, the Director General of Electricity and Energy Development of the Ministry of Mines and Energy Zuhal said that the government has decided to give full authority to PT PLN to negotiate the prices of electricity from private generators.

He said that the electricity prices, which used to be negotiated by the government, will now be negotiated by PT PLN.

"It is high time to vest us with such authority because we know all the technical details on electricity projects," Djiteng added.

The government has so far approved power generation projects for three private investors, comprising coal-fired power plants: Paiton I with two units each producing 615 megawatts (MW), Paiton II with two units each producing 610 MW, both in East Java, and Tanjung Jati B with two units each producing 660 MW in Central Java. (04)