Jakarta demands IPPs lower electricity tariff
Wednesday, February 14 2001 - 04:30 AM WIB
Economic czar Rizal Ramli said yesterday the government has demanded Independent Power Producers (IPPs) lower their electricity tariffs.
"We are striving to settle this private power issue. However, these negotiations must be conducted in a 'certain way' so that the results will be fair for Indonesia," Ramli told the press following a meeting between state utility company Perusahaan Listrik Negara (PLN) and a consortium of private power producers.
"This (talk) is not only an agreement and signing ceremony? (we) are also seeking to find a solution so that the tariffs can be lowered and not jeopardize PLN's cash flow," Ramli added.
The power dispute is one of the ugly legacies of the corrupt New Order government, which ended when Soeharto was forced down in May 1998 after 32 years in power.
Under the agreement, PLN must buy electricity from the IPPs at a much higher price than its selling price. Worse still, PLN pays in US dollars and receives income in rupiah.
When the economic crisis broke out, PLN began its painful journey into bankruptcy.
"Currently we have 27 troubled private power cases," Ramli said.
Also attending yesterday's talk were the Overseas Private Investment Corporation (OPIC), which handles certain US investment projects in Indonesia, Energy and Mineral Resources Minister Purnomo Yusgiantoro, Foreign Minister Alwi Shihab and PLN President PLN Kuntoro Mangkusubroto.
US$18 billion investment
Despite the troubles grappling the country's power sector, the government sees a US$18 billion investment in electricity projects until 2010.
Investment in the next ten years will focus on power generator and transmission projects, PLN Commissioner Endro Utomo Notodisuryo told a seminar in Singapore.
Indonesia's electricity consumption is expected to grow by an average of 9% per year until the year 2010.
Notodisuryo said the projects will involve foreign investors.
"Foreign investors can own up to 95% of a power generator project while PLN controls the transmission and distribution," he said. (*)