PLN considers using LPG for its power plants

State owned electricity company PLN is considering using liquefied petroleum gas (LPG) in some of its power plants in order to reduce operating costs, Investor Daily reported on Wednesday.

PLN's director for power generation and primary energy, Ali Herman Ibrahim, said in Jakarta on Tuesday that the state owned electricity company would purchase the LPG from Bontang and Arun LNG plants, and from the Balikpapan oil refinery.

"We have received a commitment to get LPG supply of up to one ton a year from Bontang, Arun and Balikpapan," he was quoted as saying.

He said rather than buying diesel oil at market prices, using LPG would be less costly for PLN. The price of LPG is about US$380 per ton or Rp 3,600 per kilogram, while the market price of diesel oil is about Rp 4,800 per liter.

PLN has been asked to buy diesel oil at market price because the subsidized diesel oil supply allocated for the electricity company had exceeded the limit. "The use of LPG is only temporary," he added.

PLN is modifying some of its power plants in a bid to reduce the use of diesel oil which at present reaches about 30 percent of the national consumption. "We hope by the end of 2008, the use of the diesel oil could be reduced to five percent of the national consumption," Herman added. (*)