EEC believes PLN will honor contract on Sengkang power project
Wednesday, January 31 2001 - 06:00 AM WIB
Australian firm Energy Equity Corporation (EEC) said it believed state electricity company PLN and the Indonesian government would honor all their obligations contained in the power purchase agreement (PPA) related to the Sengkang power project in South Sulawesi.
The company, listed in Australia, said in the financial statement obtained by Petromindo.Com that PLN had been seeking to meet all its financial obligations to PT Energy Sengkang, which owns the power plant, despite financial burdens experienced by the state company since economic crisis hit the country in 1997.
"While the company cannot predict the ultimate outcome of Indonesia's financial difficulties or the impact of such matters on the company or its associates, it believes PLN, through the Government of Indonesia (Ministry of Finance) as sole shareholder of PLN will honor all obligations on the Sengkang project in full," the company said.
EEC owns 47.5 percent of Energy Sengkang in a partnership with
American gas energy firm El Paso Energy (47.5 percent) and local firm PT Trihasra (5 percent), which is controlled by former President Soeharto's daughter Siti Hadiyanti Rukmana, also known as Tutut.
The company has built a US$225 million, 135-Megawatt combined cycle power plant in Sengkang. It has signed a 20-year take-or-pay power purchase agreement (PPA) with PLN at the power price of 6.5 US cents per kilowatt-hour.
The power plant came into production in 1998, during which PLN was at the peak of financial difficulties caused by the economic crisis. PLN has been seeking to renegotiate its PPA with all independent power producers (IPP), including Sengkang Energy, to ease its financial burdens.
EEC said Sengkang Energy and PLN had made interim agreement in August 1999, allowing the latter to receive partial payments for its power supplies to cover its operating costs. Both parties later extended to the interim agreement several times with the last one expiring in September last year.
It remains unclear if both parties agreed to extend the last interim agreement.
The company said during the interim agreement period, Energy Sengkang received a partial payment of arrears of $33.3 million from PLN in May last year, but it said PLN still owed Energy Sengkang $42.625 million as at June 30, 2000.
"Since entering into the interim agreement, PLN has honored all terms and conditions of the agreement and all amounts payable under the agreement have been received," EEC said.
EEC said despite all the financial problems experienced by Sengkang Energy, the company was still optimistic about the future of the power project.
"The EEC board views the Sengkang gas and power project in South Sulawesi as the key asset that will also provide growth opportunities for the company," it said. (Bodega)