PLN asked to estimate price for Sarulla power

The government has asked stated-owned electricity company PT Perusahaan Listrik Negara (PLN) to set an estimated price for electricity to be produced by the Sarulla geothermal power plant which will be built by PT Medco Power Indonesia (MPI) and its partners in North Sumatra.

Jokobus Purwono, Director General of Electricity and Energy Utilization at the Ministry of Energy and Mineral Resources, said in Jakarta on Wednesday that PLN?s estimated price could be used as a reference in renegotiating the purchasing price of the Sarulla power.

He called on PLN to set the estimated price as soon as possible so that it can resume negotiations with the Sarulla consortium and the project can be soon materialized.

In November 2008, MPI and its partners proposed to raise the price to between 5-7 U.S cents per kilowatt hour (kWh) from 4.64 U.S. cent per kWh under the power purchase agreement (PPA) signed with PLN in 2004

?The production cost has increased, exceeding the agreed selling price,? MPI?s President Director Fazil Alfitri told reporters in Nov 2008.

As a result of the protracted price negotiation, he said, the consortium will delay the development of the first phase of the project until 2011 from the initial plan of 2010.

The Sarulla consortium plans to develop three geothermal power units over a period of five years, each with the capacity of 110 MW to 120 MW.

Aside from MPI, which is a subsidiary of PT Medco Energi International, the consortium includes Japan?s Itochu Corp (25 percent), Kyushu Electric Power Co Inc (25 percent) and American firm Ormat Technologies Inc. (12.75 percent.(godang)