Thu, 10 Jul 2003

Power firm PLN welcomes LNG domestic sale plan

The Jakarta Post, Semarang, Central Java

State power company PLN welcomed on Thursday the government's plan to market liquefied natural gas (LNG) in Java, saying it would encourage PLN to use gas rather than oil-based fuels to fire its power plants on the island.

The use of gas rather than oil-based fuels would cut PLN's costs in generating power, PLN's president Eddie Widiono told reporters.

He made the comments following reports that the government planned to sell the country's LNG on the local market amid tighter competition in regional export markets. The government is considering inviting investors to build two LNG receiving terminals in Java, respectively located in West Java and East Java.

According to Eddie, PLN spends Rp 510 (about 6.2 U.S. cents) to produce one kilowatt-per-hour (kWh) of power when it uses oil- based fuels. If it were to use gas, however, the company would only spend Rp 200 per KwH to produce electricity.

Now, he said, as most of the company's combined-cycle power plants in Java lacked gas supplies and thus had to use oil-based fuels, PLN's had to spend a lot of money on the purchase of fuel.

PLN now spends some Rp 15 trillion annually to buy oil-based fuels and some Rp 5 trillion to buy gas, according to Eddie.

"Thus, if we can switch from oil to gas as a fuel for our power plants, we should save from Rp 8 trillion to Rp 10 trillion," Eddie said.

PLN has several combined cycle power plants in Java, including the Muara Karang power plant in North Jakarta and the Gresik power plant in East Java.

The Gresik power plant experienced difficulties several weeks ago due to a lack of gas supplies.