PLN expands policy to review PPAs with ?expensive? tariff
Tuesday, November 21 2017 - 01:00 AM WIB
Petromindo
State-owned electricity firm PT PLN will expand its latest move in reviewing power purchase agreements (PPAs) of coal-fired power plant (PLTU) projects to also include contracts with independent power producers (IPPs) which have been operating their PLTUs for at least 10 years.
PLN President Director Sofyan Basir said on Monday that the utility firm will review PPAs of PLTUs whose electricity tariffs are ?too expensive.?
He said that PLN will use as benchmark the average tariff of around 5.5 US cents per kWh for PLTUs in Java in the negotiation with the IPPs for lower tariff. He said that the move forms part of efforts to help provide more affordable electricity tariff for its consumers.
Soyan was quoted by kontan.co.id as saying that PLN will not continue purchase the electricity from the PLTUs if the tariff remains expensive, and is willing to pay penalty.
He did not disclose the number of PLTUs with electricity tariffs considered as too expensive.
On November 3, Director General of Electricity at the Ministry of Energy and Mineral Resources, Andy Noorsaman Sommeng sent a letter to PLN requesting the company to review PPAs of large scale PLTU projects in Java which have yet to start construction or have yet to obtain the business guarantee letter from the Ministry of Finance, in a bid to lower the electricity tariff to maximum level of 85 percent of the local electricity supply cost (BPP) of PLN where the project is located. PLN translates the letter as bringing down the electricity tariff of the PLTU projects to below 6 US cents per kWh.
The Indonesian Private Power Producers Association (APLSI) criticized the move, saying it would create new uncertainty and undermine investment climate in the power sector.
Meanwhile, Secretary of the Directorate General of Electricity, Agus Tribusono said that PLN?s plan to review PPAs of PLTUs operating for more than 10 years will be made on a business to business negotiation between PLN and the IPPs. He said that this is not included in the latest policy of the directorate. (*)