USAID, WB, ADB extend grant to PLN
USAID, WB, ADB extend grant to PLN
JAKARTA (JP): The United States Agency for International
Development (USAID), the World Bank and the Asian Development
Bank (ADB) have extended a grant to the government to help the
state-owned electricity company PLN renegotiate with its power
contractors.
Director General of Electricity and Energy Development at the
Ministry of Mines and Energy Endro Utomo Notodisuryo said the
grant would be used to hire a top lawyer from the United States
and a local lawyer to devise "technical strategy" for PLN to face
the contractors at the negotiating table.
"They will become legal advisors to PLN," he said.
Endro, however, refused to reveal the amount of the grant or
the names of the lawyers.
PLN has been ordered by the government to renegotiate its
power purchase contracts with 26 independent power producers.
Some of the power producers have started operation but most
are still developing their facilities, some of which have been
put on hold by the government in retrenchment measures to cope
with the economic crisis.
The crisis, which has seen the rupiah fall in value against
the U.S. dollar by more than 70 percent since last July, has
battered PLN's financial performance so much that it is no longer
able to comply with the contracts.
PLN is looking for changes in several aspects of the
contracts, including a decrease to below 6 U.S. cents per
kilowatt hour (kwh) for the purchase of power, compared to
current prices of between 5.74 cents and 8.4 cents.
PLN also demands that the power volume it has to buy under a
take-or-pay scheme be reduced to only 30 percent of the
independent power companies' capacity, compared to 80 percent at
present.
It also calls for the rescheduling of all power projects not
yet completed to avoid a huge oversupply.
Minister of Mines and Energy Kuntoro Mangkusubroto said
earlier such renegotiations could take months since the
independent power companies opposed PLN's proposals.
The consortium which is developing the 1,230 megawatt (MW)
coal-fired Paiton I power plant in East Java announced last week
that it rejected PLN's proposal, saying it would sell its power
for 7.5 cents per kwh in accordance with its contract.
Paiton I was scheduled to come on stream in the fourth quarter
of the year. (jsk)