Paiton Energy to expand capacity by 800 MW

Independent Power producer PT. Paiton Energy said it was ready to construct additional 800 MW coal-fired power station near its 2x615 MW power plant in Paiton, Probolinggo, East Java with negotiation with state electricity firm PLN regarding power purchase agreement (PPA) expected to be completed later this month, company executives said.

Paiton Energy Ronald Landry told reporter that the plant?s construction was expected to commence in 2005, with completion seen in 2008.

Landry said that Paiton Energy was asking PLN to pay US 4.79 cents per Kwh from the proposed plant, slightly cheaper than current price of which is a little cheaper than selling price of 4.93 cents per Kwh from existing plants.

Landry investment to construct the new plant would cost the company $580 million. The plant will be the first single largest power plant unit operating in Indonesia.

However, PLN said it would insist that Paiton lowered down its selling price below 4.5 cents. ?PLN thinks the price Paiton is offering is too high. Cilacap greenfield power plant in Central Java could deliver electricity at 4.57 cents per Kwh, Paiton must be able to offer cheaper price that Cilacap as it doesn?t have to invest in infrastructure anymore,? PLN director Ali Herman Ibrahim told Petromindo.Com on a sideline of CoalTrans conference in Bali. He was referring to the new 2x300 MW coal fired power plant that is being constructed in Cilacap, Central Java.

?If Paiton can not deliver electricity below 4.5 cents per Kwh, than it would be better for PLN to build the plant by ourselves,? he said.

Meanwhile another Paiton executive said that the power plant would consume around 2.5 million tons of coal per annum. ?We have had talks with Kalimantan coal producers such as Adaro Indonesia, Kideco Jaya Agung, Arutmin Indonesia, KPC and other suppliers. We are confident that we?ll be able to secure long-term coal supply,? said James Booker, Paiton?s Vice President for Project Development.

Paiton Energy is 44 percent owned by US energy firm Edison Mission. Mitsui Corp. has 37 percent shares and General Electric has 14 percent. The remaining 5 percent shares are controlled by Indonesian company.

Paiton Swasta I which is the first and largest Indonesian IPP Project with a 1,230 MW coal fired power plant in East Java. The project achieved financial close in 1995 and the plant was commissioned in 1999 - at the height of the East Asian financial crisis. In 2002, PLN and Paiton Energy agreed to an Amended Power Purchase Agreement. The successful restructuring of the project?s debt which was completed on February 14, 2003.(alex/godang)