PLN may fail to obtain gas from Amerada

State owned electricity company PLN may fail to get an additional gas supply of about 100 million standard cubic feet per day (MMSCFD) from Amerada Hess because its inability to meet the gas producer's requirement to provide standby letter of credit (L/C) worth US$120 million, Bisnis Indonesia reported on Monday.

Ali Herman, a director of PLN, said in Jakarta over the weekend that Amerada insisted the state owned electricity company to provide LC worth US$120 million as the guarantee for the annual supply of the gas, while PLN was only able to provide LC of $36 million per quarter.

"We are still negotiating if we could provide letter of credit worth $36 million in every four months," he said.

PLN is in dire need to obtain additional gas supply of about 100 million MMSCFD for its power plant in Gresik, East Java. At present, the plant receives most of its gas needs from BP Kangean but the supply from this gas field continues to show a decline.

PLN's power plant in Gresik needs at least 242 MMSCFD. Besides from Amerada, PLN also expects additional gas supply from Kodeco and Lapindo. (*)