PT PLN reaches temporary agreement with Paiton
JAKARTA (JP): State electricity company PT PLN said on Monday it had reached a temporary agreement with independent power producer (IPP) Paiton Energy on their contractual dispute and expected to find a final solution within 10 months.
PLN president Kuntoro Mangkusubroto said after reaching the interim agreement, renegotiations on the power purchase contract between PLN and Paiton would start next month.
"The renegotiations will start next month and are expected to be completed in 10 months," Kuntoro said during a hearing with the House of Representatives Commission VIII, which oversees mines and energy.
He said the negotiations with Paiton were conducted by the government, not PLN.
Kuntoro said the interim agreement pertained to the price of power supplies from Paiton to PLN until they reached a final solution to their dispute.
He also said PLN had reached an interim agreement with other IPPs that had come on stream.
According to PLN's data, of the 27 IPPs that had signed power purchase agreements, three have begun operations.
They are the 135-Megawatt (MW) combined cycle power plant in Sengkang, South Sulawesi; the 165-MW geothermal power plant in Salak, West Java; and one 615-MW unit of the 1,230 coal-fired Paiton I power plant in Probolinggo, East Java.
Under the contracts, Sengkang charges PLN 6.7 U.S. cents per kilowatt hour (kWh) for its power supplies for 20 years; Salak charges an average of 6.6 cents per kWh for 30 years; while Paiton charges an average 7.3 cents for 30 years.
Kuntoro said thus far the IPPs and PLN had agreed on two interim payment schemes until the completion of the renegotiations.
He said under the first scheme, PLN bought the IPPs' power supplies at the exchange rate of Rp 2,450 per U.S. dollar, as against the current rate of Rp 7,450 per dollar.
Under the second scheme, PLN buys the power supplies from the IPPs at the price individually agreed upon by PLN with each of the IPPs.
Kuntoro, however, refused to specify which scheme was chosen by Paiton and other IPPs in their interim agreements with PLN.
He said the right to disseminate information on the agreements did not lie with PLN, but the government.
"What is important is that during the 10 months of the interim agreement period, PLN and the IPPs agreed not to file any suits against each other until a long-term agreement was reached, " he said.
PLN was one of the state companies heavily affected by the economic crisis since it sells power in rupiah and spends most of its costs, including the cost of the purchase of power supplies from IPPs, in dollars.
The company has been seeking to renegotiate its contracts with the IPPs, including a request for the IPPs to lower their power prices.
After a year of unproductive negotiations with Paiton, PLN filed a lawsuit in October last year to nullify its contract with Paiton, causing an international controversy.
To avoid further controversy, President Abdurrahman Wahid ordered PLN to drop the lawsuit, saying the suit hurt relations with foreign investors.
The government subsequently formed a new renegotiation team to deal with PLN's dispute with the IPPs.
Heading the team is Coordinating Minister for the Economy Finance and Industry Kwik Kian Gie, with Minister of Mines and Energy Susilo Bambang Yudhoyono, State Minister of Investment and State Enterprises Development Laksamana Sukardi and Minister of Foreign Affairs Alwi Shihab as members.
Paiton Energy is a joint venture between Japan's Mitsui Corporation (32.5 percent), General Electric (12.5 percent), Edison Mission Energy of the United States (40 percent) and local company PT Batu Hitam Perkasa (15 percent). (bkm)