Govt reaches final agreement with 7 power producers

Minister of Mineral Resources and Energy Purnomo Yusgiantoro revealed on Wednesday that the government had reached "final agreement" with seven independent power producers (IPPs) over the high profile power selling price dispute, the Republika daily reported.

The paper quoted Purnomo as also saying that the government had completed agreement with three other IPPs, and were continuing negotiation with 17 other IPPs.

Purnomo was speaking during a meeting with the House of Representatives commission VIII on mining and energy.

He said that the government expected to complete the final deal with seven IPPs soon. "It is expected that in the very near future the negotiation (with the seven IPPs) can be completed."

The seven IPPs operates the Tanjung Jati B coal-fired power plant, Sengkang coal-fired power plant, Tanjung Jati C coal-fired power plant, Pare-Pare diesel power plant, Pasuran combined-cycle power plant, Cilegon coal-fire power plant, and Serang coal fired power plant.

The state-owned electricity company PLN signed contract to purchase power from some 27 IPPs during the era of former authoritarian president Soeharto. But when the economic crisis deepened in 1998 and following the downfall of Soeharto, the government and PLN were forced to renegotiate the contract amid accusations that the power projects were plagued with corruption, and that the power selling price was deemed as too high which could send PLN into bankruptcy.

Purnomo said that the completed negotiations included contracts made with the Darajat geothermal power plant, Cilacap coal-fired power plant, and Tanjung Jati A coal-fire power plant. He said that the government dropped the Tanjung Jati A contract.

The contracts which are still under negotiation process include Paiton I power plant, Paiton II, Gunung Salak 4, 5, 6, Wayang Windu plant, Cikarang plant, Dieng plant, Patuha plant, Karaha Bodas plant, Kamojang plant, Bedugul plant, Cibuni plant, Palembang Timur plant, Sibayak plant, Asahan plant, Sibolga plant, Amurang plant, and Sarulla plant.

Separately, the Kompas daily quoted Paiton Energy Company (PEC) president Ronald P. Landry as saying that he was optimistic the company could soon completed the negotiation process with the government over the Paiton I contract. He said that the new price offered by PEC to PLN was at 5.5-5.6 U.S. cent per Kwh for power to be supplied by Paiton I.(*)