PLN has loss potential of Rp 268b if it buys Paiton electricity at 7 U.S. cents per KwH
Thursday, March 22 2001 - 04:30 AM WIB
If it is true that state electricity company PT Perusahaan Listrik Negara (PLN) has agreed to buy electricity from PT Paiton Energy at a price of 7 U.S. cents per kilowatt hour of electricity, PLN will suffer a potential loss of Rp US$268.29 million per annum, or equivalent with Rp 268.29 billion at an exchange rate of Rp 10,000 per U.S. dollar.
The chairman of the House of Representatives' Commission VIII Irwan Prayitno noted that the House had set a ceiling of 4 U.S. cents per KwH of electricity from Paiton. And if PLN was deviant enough and finally agreed to buy Paiton electricity at 7 U.S. cents per KwH, it means that it was 3 U.S. cents more expensive.
Irwan contended that 1 U.S. cent of electricity PLN agreed to buy would cost the company US$89.43 million.
Because of the news report saying that PLN had agreed to buy electricity from Paiton at 7 U.S. cents per KwH, Commission VIII summoned PLN president Eddie Widiono for a closed-door meeting on Wednesday (March 21).
According to Irwan, Eddie reported to the commission that the agreed price was not 7 U.S. cents per KwH, but below 4 U.S. cents, as stipulated by the House.
"Although it was not explicitly explained because of confidentiality argument, the PLN president said that the price was below 4 U.S. cents," Irwan said.
That price, according to Irwan, would be valid until July 2001, based on an interim agreement signed between PLN and Paiton. After that, they would make a new agreement.
Irwan suspected that after July 2001, Paiton would demand a much higher price for its electricity.
Earlier, Paiton president Ronald P Landry described his company as one of the independent power producers that provided one of the cheapest electricity to PLN. But he did not mention how much it sold its electricity to PLN. (*)