PLN to use LPG in some plants

PLN to use LPG in some plants

Leony Aurora, The Jakarta Post, Jakarta

State power firm PT PLN is preparing to convert its plants in
Balikpapan, Singkawang and Pontianak, all in Kalimantan, to use
liquefied petroleum gas (LPG) instead of the oil they currently
use to generate electricity.

PLN's director of power plants and primary energy generation,
Ali Herman Ibrahim, said the plants had a total capacity of some
200 megawatts.

"In the first phase we will need some 400,000 tons of LPG per
year," he said on Thursday. "Eventually the requirement will go
up to one million tons (per year)."

As global oil prices have soared and PLN's need for oil has
risen past the quota set by the government, the company has been
looking for cheaper alternatives to generate power.

State oil and gas firm Pertamina has said that PLN may have to
pay for some 3.09 million kiloliters of over-quota fuel at market
prices, which is about twice what PLN currently pays of Rp 2,200
(about 22 US cents) per liter.

Ali said that with oil prices at US$60 per barrel and
unsubsidized fuel at Rp 4,800 per liter, LPG, which costs about
Rp 3,000 per kilogram, was cheaper.

"We will use LPG to bridge our needs for three years, before
(natural) gas flows to our plants," he said.

PLN and the Oil and Gas Upstream Executive Agency (BP Migas)
signed a memorandum of understanding on Thursday on a pilot
project to use LPG to generate power.

BP Migas chairman Kardaya Warnika said the country had enough
LPG in its stores to meet PLN's demand.

"We are ready (to supply). We can use gas produced by the
Belanak field and PetroChina's Jabung field," he said.

According to Kardaya, Indonesia produces between 3.5 million
tons and 4 million tons of LPG a year, of which less than half is
sold in the domestic market.

"All we need to know is how much PLN needs and where," he
said.

Observes have said Indonesia must diversify its energy sector
as surging global oil prices threaten to double the fuel subsidy
from the current whopping Rp 76.5 trillion set in the budget.

As a state company, PLN, which uses fuel to produce 18 percent
of its electricity supply, has been urged to utilize other fuels
such as coal.

PLN's operational costs would jump by Rp 7.5 trillion this
year if the government made the company pay market prices for its
over-quota of 3.09 million kiloliters of fuel.

The company booked another net loss in 2004 of Rp 2.02
trillion but managed to record an operating profit of Rp 2.56
trillion, the first time since the monetary crisis in 1997 that
is has achieved an operating profit.