PLN offers new rules on power agreements

JAKARTA (JP): The state-owned electricity company PLN is proposing some changes in the electricity pricing and the volume of power to be taken up within its power purchase agreements.

Under the changes, the price of private electricity to be paid by PLN will be set at a maximum 6 U.S cents per kilowatt hour, Director General for Electricity and Energy Development Endro Notodisuryo said.

"The new policy has been proposed since April to investors which apply for licenses to develop power plant projects," Endro told The Jakarta Post yesterday after a hearing with the House Commission VI on Mines and Energy.

PLN has so far signed 25 power purchase agreements with private power companies, under which PLN will buy power at prices of between 5.75 cents and 8 cents per KWh.

PT Tanjung Jati Power Company, which will operate a coal-fired power plant in Jepara, Central Java, has set the lowest price of 5.74 cents per KWh, while the Paiton I coal-fired power plant in East Java will charge the highest price at 8.56 cents in its first six years of operation.

Analysts argued the power purchase agreements have disadvantaged PLN because the company sells the power to the public for only 5.9 cents per KWh.

"So far, none of the applicants have rejected the proposed ceiling price," Endro said.

He said PLN had also proposed that PLN's subsidiary PT Jawa Bali be involved as a shareholder in any private power projects.

PT Jawa Bali's participation as a shareholder would enable PLN to exercise better control of the power plants, he said.

Endro said PLN had also proposed new investors lower their power purchase commitment to between 30 percent and 50 percent of the generation capacity of the power plants they were going to operate.

Under the power purchase agreements signed so far, PLN has to buy between 80 percent and 83 percent of private power operators' generation capacity, Endro said.

Under the new proposed scheme, PLN will only have to buy between 30 percent and 50 percent of the generation capacity of private power plants, and the remaining capacity will be pooled for a competitive bidding.

"PLN will buy from suppliers which offer the cheapest price in the bidding," Endro said. (jsk)