PLN renews calls on Paiton to lower power prices
PLN renews calls on Paiton to lower power prices
JAKARTA (JP): State-owned electricity company PT PLN renewed
calls on developers of the Paiton power plants in East Java on
Wednesday to lower prices of their power supplies, accusing them
of mark-up practices.
"The prices of their power supplies are too high. It's a
'world-class' markup," PLN president Adhi Satriya said on the
sidelines of a seminar on cogeneration.
Adhi made the calls on PT Paiton Energy Co. and PT Jawa Power,
which are developing two giant coal-fired power plants in Paiton,
Probolinggo.
Paiton Energy is owned by American companies Mission Energy
and General Electric in partnership with Japan's Mitsui and local
company PT Batu Hitam Perkasa, controlled by tycoon Hashim
Djojohadikusumo.
It is developing two power units -- known as Paiton I -- with
a combined power generating capacity of 1,230 Megawatts (MW).
PT Jawa Power is owned by Siemens of Germany, PowerGen of
Britain and local company PT Bumipertiwi Tatapradipta, controlled
by former president Soeharto's son, Bambang Trihatmodjo.
It is developing two power units -- popularly known as Paiton
II -- with a combined power generation capacity of 1,220 MW.
Both power plants are being developed on a plot owned by PLN,
where the state-owned company is operating an 800 MW power plant.
Under the 30-year power purchase agreement (PPA) signed in
1994, PLN has to buy power from Paiton Energy at 8.4 cents per
kwh in the first six years, at 8.2 cents during the next six
years and 5.4 cents for the remaining 18 years.
PLN signed a PPA with Jawa Power in 1995, under which the
former would buy power from the latter at 6.59 cents per kilowatt
hour for 30 years.
Adhi said PLN would not buy power from both companies due to
the power oversupply on the Java-Bali power network. This is
despite the fact Paiton Energy has been operating one of its two
power units since May this year and Jawa Power is about to
operate one of its power units.
However, under the PPA's take-or-pay clause, PLN still has to
pay the company US$995 million per year for the so-called "fixed
cost", Adhi said.
"The amount is equal to the budget for the development of a
two-unit power plant with a combined capacity of 600 MW," Adhi
said.
Adhi said PLN was negotiating with both companies to reduce
the price of their power to a reasonable level.
Adhi said the reasonable price level for power supplies from
both companies was about 3.4 cents per kwh, taking into account
the fact that both companies had used commercial loans for the
development of the power plants.
He noted both companies could reduce their construction costs
by building their facilities on the plot owned by PLN.
In comparison, Adhi said, PT HI Power Tubanan, which was
developing the Tanjung Jati B coal-fired power plant in Jepara
with a 1,320 MW generation capacity, a higher capacity than the
Paiton power plants, was ready to reduce its power price to 2.3
cents per kwh from 6.4 cents.
"This is despite the fact the company had to spend costs to
appropriate the land for their facilities," Adhi said. (jsk)