PLN ordered to operate idle Dieng power plant

PLN ordered to operate idle Dieng power plant

JAKARTA (JP): The government has instructed state-owned
electricity company PLN to operate the idle Dieng geothermal
power plant in Central Java in order to obtain cash for the
repayment of a US$260 million claim made by the U.S. insurance
firm, Overseas Private Investment Corp (OPIC), a minister said on
Tuesday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said that the proceeds were needed to avoid drawing capital from
the already strained state budget.

"If the power plant could be operated, it would be able to
cover the OPIC claim without burdening the state budget," he told
reporters.

Purnomo said Minister of Finance Boediono had ordered PLN to
operate the 60 megawatt Dieng geothermal power plant on a
temporary basis pending the government's decision on the definite
operator of the power plant.

State-owned oil and gas company Pertamina was also interested
in operating the power plant, but it had yet to make a final
decision, according to Purnomo.

"The government is still discussing whether to give the
operation to a new company jointly owned by PLN and Pertamina,"
Purnomo said.

The Dieng geothermal power plant was initially owned by the
American independent power producer (IPP), CalEnergy Company
Inc., which had been renamed MidAmerican Energy Holdings Co.
Aside from the Dieng power plant, it had also developed the
Patuha geothermal power plant in West Java.

The company, however, abandoned the power projects in 1998
following a dispute with PLN and the government, which ordered it
to halt the project in a belt-tightening effort to cope with the
economic crisis.

MidAmerican then filed arbitration proceedings against PLN and
the government and won the dispute.

OPIC, which is an insurance firm owned by the U.S. government,
paid the company $260 million in compensation.

But, OPIC subsequently demanded the Indonesian government and
PLN reimburse the insurance claim.

The Dieng geothermal power plant was initially designed to
have a power generation capacity of 400 Megawatts (MW). But
CalEnergy could only complete the construction of a power unit
with the generation capacity of 60 MW when it abandoned the power
plant in 1998. The power plant has since been left idle.

Meanwhile, the Patuha power plant, which was designed to have
a generation capacity of 320 MW, was only 30 percent completed
when CalEnergy stopped construction work in 1998.

Former minister of finance Rizal Ramli signed an agreement
with OPIC last July that allows the Indonesian government to
reschedule the payment of the insurance claim in a scheme to be
agreed upon by the government with the country's Paris Club of
creditors.

But, the new Cabinet has annulled the agreement. (11)