Govt urged not to accept Paiton?s latest price proposal

Head of the workers union of the state-owned electricity company PT PLN Hasri Hutabarat urged the government not to accept the latest price proposal of independent power producer PT Paiton Energy Company as it was considered still too high.

Hasrin said that the government should continue to negotiate with Paiton to bring the price to below 3 U.S. cents per Kwh.

Paiton has recently agreed to lower its power price to 4.65 U.S. cents per Kwh from earlier proposal of 5 U.S. cents per Kwh.

Sources said that a special government team seemed to agree to the Paiton?s latest price offer particularly after an independent consultant called Lavalin recommended that the fair price was at around 4.1 U.S. cents per Kwh.

But Hasrin, who has been critical of the country?s power policy, said that the government should not fully rely on Lavalin recommendation. He said that the government must calculate the real cost if PLN produced the power and the price PLN would sell to customers.

Paiton is one of the independent power producers whose power selling contract with PLN had been cancelled by the government following the 1997 economic crisis. There has been allegations of mark up in the power purchase contract, which would force PLN into bankruptcy if it agreed to implement the contract.

Paiton initially offered a price more than 8 U.S. cents per Kwh in the contract.(Amoros)