PLN to pay US$69m to Paiton Energy

PLN to pay US$69m to Paiton Energy

Dow Jones, Singapore

State power company PT PLN has signed an interim agreement to make three fixed monthly payments totaling US$69 million in the fourth quarter to independent power producer PT Paiton Energy.

A PLN official involved in the negotiation of the power purchasing agreement said Thursday that PLN will pay Paiton US$21 million in October, $23 million in November and $25 million in December for power generated from the 1,230-megawatt Paiton-I plant.

Paiton Energy's shareholders are Edison Mission Energy, a unit of Edison International, General Electric Capital Corporation, a financing arm of General Electric Co., Japan's Mitsui & Co. and a local partner, PT BHP.

Under the fixed payment deal, PLN is paying 3-4 cents a kilowatt-hour for the electricity produced from Paiton-I, a rate it hopes to secure in long-term power purchasing agreements, or PPAs, with the operators of Paiton-I and Paiton-II projects in East Java.

PT Jawa Power, operator of the 1,220 MW Paiton-II plant, is seeking a minimum rate of 5 cents per kilowatt hour (kWh), but the PLN official said the rate sought was "too high for PLN."

Jawa Power is 50 percent-owned by Germany's Siemens Power, 35 percent by the U.K.'s PowerGen PLC, and 15 percent by local company PT Bumipertiwi Tatapradipta

PLN, the official added, is continuing negotiations for long- term PPAs, which are expected to be concluded before the end of the year.

Meanwhile, PLN's finance director warned that 24 critical systems outside the Java-Bali grid in 2002 will experience power shortages because of insufficient funds.

He said the state utility doesn't have the financial ability to build new generating units to match the country's power demand growth.

PLN expects to hook up 1.3 million new customers in 2002, still 50 percent short of the 2.6 million new annual connections achieved before the Asian crisis, Parno said.

PLN has about 29 million customers in the archipelagic country with a population of 220 million, Parno Isworo said. Using the statistics as a guide, PLN is servicing 60 percent of Indonesia, leaving the rest with no access to electricity, he added.

"The demand pressure is great, but we cannot connect more customers because we have no money," Parno Isworo said.

The power demand shortage is especially acute in 24 grid systems identified. They include South Sumatra, West Timor, East and West Nusa Tenggara and Potianak, West Kalimantan. The power generation capacities in these areas are insufficient to meet local demand because of a lack of fresh investment, he said.

PLN has no choice but to "curtail" the electricity supply in these areas, said Parno Isworo. PLN will resort to power rationing particularly during peak load periods.

There are few short-term solutions to resolve power shortfalls in areas outside the densely populated Java-Bali grid. But in South Sumatra, plans are underway to revive the construction of a 200-megawatt steam-powered power plant. However, there will be frequent blackouts in the short term because the plant isn't expected to be completed until 2005.