PLN undecided on power buying deal with CEPA
PLN undecided on power buying deal with CEPA
JAKARTA (JP): State-owned electricity company, PT Perusahaan
Listrik Negara (PLN), has yet to decide if it will buy
electricity from the Tanjung Jati "B" power plant at a price
lower than initially agreed upon.
PLN's director for planning P. Sihombing confirmed that the
company has received a proposal from the plant's contractor, PT
Consolidated Electric Power Asia (CEPA) Indonesia, offering to
sell electricity from the Tanjung Jati "B" power plant to PLN at
US$0.0645 per kilowatt hour (kWh), or $0.009 lower than the
$0.0735 initially agreed upon in 1994.
However, he said, the issue cannot be dealt with immediately
as PLN is waiting for government approval of its intention to
cancel its power purchasing agreement with CEPA.
PLN's proposal is currently in the hands of President
Soeharto, Sihombing said.
"CEPA, as the contractor of the Tanjung Jati 'B' power plant,
is free to propose a price reduction, but we have not come up
with a decision because our proposal to end PLN's power
purchasing agreement with CEPA is now being processed by the
government," he said, as quoted by Antara.
He declined to explain the basis of PLN's proposal to cancel
the power purchasing agreement, in which the contractor will
operate the plant under a build-operate-and-transfer scheme.
Earlier reports, however, said that PLN regarded the price
offered by the Hong Kong-based CEPA -- $0.0735 per kWh -- as too
high.
By comparison, the Sibolga "A" power plant is expected to sell
its electricity to PLN at $0.0655, and the Paiton II power plant
at $0.066 per kWh.
Reports also said that the construction of the 1,300-megawatt
Tanjung Jati "B", to be located in Jepara, Central Java, was also
considered too expensive, with investments reaching as high as
$1.77 billion.
By comparison, the Tanjung Jati "A" steam-powered plant --
with a similar capacity -- was built with $1.66 billion.
Apart from that, PLN also appeared disappointed with the
decision by CEPA to move the site of the Tanjung Jati "B" plant
from the initially-agreed upon location of Bondo village in the
Jepara regency.
The reports said CEPA faced problems in land appropriation in
the village, forcing it to shift to Tubanan village in the same
regency. In the latter village, however, CEPA reportedly faced
new problems as the land is productive agricultural land.
Despite the problems, CEPA President Djan Faridz was
confident that construction would go smoothly at the Tanjung Jati
"B" plant in Tubanan village, which is slated for completion by
the end of 1998.
Djan said Sumitomo Ltd. has been appointed the main contractor
for the project while funding will come from Sumitomo and a
syndication of seven banks, led by Citibank.
Djan considered the electricity price offered by CEPA was not
expensive, given that his company had already proposed to cut
back the selling price to $0.0645 per kWh.
"This reduction will help PLN save $87.46 million," he said.
He said the reduction was possible since the income tax had
been cut down from 35 percent to 30 percent. CEPA, he added, was
also able to cut back on other costs. (pwn)