PGN wants to renegotiate gas price with PLN
Tuesday, November 28 2006 - 11:09 AM WIB
?PGN is ready to supply gas to Muara Tawar at the rate of 50 MMCFD (million cubic feet per day) for five years provided that the gas price is renegotiated on the business-to-business basis,? PGN corporate secretary Widyatmoko Bapang said on Tuesday.
PLN has announced a re-powering program aimed at raising the capacity of several power plants in Java, including the Muara Tawar power plant by 225 Megawatt (MW) from 920 MW at present. Japanese financing agency JBIC has pledged to provide loans for the project if PLN is able to secure gas supplies for the power plants.
Following long and unfruitful negotiations with PGN and state owned oil and gas company PT Pertamina over gas price, PLN asked the office of the Coordinating Minister of the Economy to solve the matter.
Several months ago, the office decided to set the price of PGN and Pertamina?s gas at 3.5 per million British thermal unit (MMBTU).
Pertamina has accepted the decision, saying it was ready to supply PLN with 100 MMCFD starting next year, PGN, which is a publicly-listed company, did not feel happy with the decision.
?As a publicly-listed company, PGN is obliged to maintain a sound corporate performance in order to give certainty for investors,? Widyatmoko said.
Widyatmoko said the margin that it would get from the sale of its gas to PLN was not enough to cover potential risk arising from the operation of the South Sumatra-West Java pipeline that the company will use to supply natural gas from South Sumatra to customers in Banten and West Java provinces, including the Muara Tawar power plant. (Godang)