House question how govt would pay electricity bill to IPPs

Member of the House of Representatives commission VIII on mining and energy Pramono Anung questioned the government late on Tuesday on how it intended to pay the massive electricity bill maturing this year, which was owed by the state electricity firm PLN to independent power producers (IPPs).

Pramono raised the question during a hearing session with the government electricity tariff team, which included the Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie, Minister of Finance Bambang Sudibyo, State Minister of Investment and State Enterprises Laksamana Sukardi, and PLN president Kuntoro Mangkusubroto.

The government had not answered the question until Media Indonesia printed this story.

PLN had signed power-purchasing contract with 27 IPPs. The company recently reached a preliminary agreement with Paiton Energy, the largest of the IPPs, to renegotiate the contract as the purchasing price has been deemed too high and is beyond the capability of PLN to pay. Unconfirmed reports said that Paiton had agreed to provide its power at 2.3-cent dollar per Kwh, compared to the 8.5 cent dollar per Kwh set in its earlier contract.

But PLN had yet to renegotiate with the remaining 26 IPPs.

Meanwhile, Minister of Finance Bambang Sudibyo said that the government would not pay the US$290 million claims made by OPIC of the U.S.

"We don't have money," he told reporters on the sidelines of the hearing session.

OPIC (Overseas Private Investment Corp) is the guarantor of another IPP called PLTP Dieng and Patuha, which is owned by MidAmerican Energy Holdings. An international arbitration ruled recently the PLN must pay some $576 million to the consortium. Some $290 million was guaranteed by OPIC. (*)