IPPs start turning to LNG import

Independent power producers (IPPs) are starting to turn to cheaper overseas LNG as source of gas for their gas-fired power plant projects amid rising price of the fuel at home, Bisnis Indonesia reported on Tuesday.

One of such IPPs is PT Energi Nusantara Merah Putih (ENMP), which plans to file for an LNG import permit with the government in a bid to secure cheaper gas, which would in turn help ensure competitive price of electricity from its planned combined-cycle power plant project.

?I will apply for a permit to import gas. This is for efficiency,? ENMP President Director Westana Wiratmaja told the paper, but did not provide further details.

ENMP is planning to team up with China?s Sinland Development Pte Ltd to develop a 600 MW combined-cycle power plant project at the Bantaeng Industrial Zone in South Sulawesi, which will be integrated with a floating storage and regasification unit to be developed by ENMP?s subsidiary PT Pasifik Agra Energi. Financial close is expected to be reached in 2018, and the project is targeted to be completed in 2021. The power plant will require gas at a volume 130-150 mmscfd.

Minister of Energy and Mineral Resources Ignasius Jonan has recently issued new Ministerial Regulation No 45/2017, allowing IPPs and state-owned electricity firm PT PLN to import LNG if domestic LNG price exceeds 14.5 percent of Indonesia Crude Price (ICP) limit. The gas from the imported LNG must reach a maximum level of 14.5 percent of ICP.

Head of the Indonesia Independent Power Producers Association (APLSI) Ali Herman Ibrahim said that it?s quite reasonable for IPPs to turn to LNG import given the higher domestic price. He pointed out that importing LNG from Singapore and Malaysia will be cheaper. He said that aside from price consideration, some IPPs are turning to LNG import as they?re facing difficulties in securing gas from domestic sources.

Meanwhile, PLN said that the utility company for now has no intention to import LNG as it has secured the fuel commodity from domestic sources such as LNG from the Tangguh LNG project in West Papua Province. (*)