PLN nears signing power deal with coal-fired plants

State-owned electricity company PLN is close to signing power purchase agreement with two independent power producers (IPPs), a source said.

The source said that a final agreement was expected to be made with Jawa Power early next month, and with Paiton Energy in July.

The agreement should help overcome the threat of power crisis in the country which may occur in 2004.

The government suspended the power project of around 27 IPPs following the country?s economic crisis in 1998. PLN was supposed to purchase power from the projects to avoid future power shortage. But the crisis has forced PLN to renegotiate the initial power purchase deal.

Last December, PLN reached a preliminary deal with Jawa Power to buy power at 4.8 U.S. cents per kilowatt hour (kwh). PLN was supposed to purchase the power at 6.5 cents per kwh from Jawa Power?s 1,230 MW coal fired power plant in East Java. The power generator is majority owned by Germany?s Siemens AG.

PLN president Eddie Widiono has also recently indicated that PLN was ready to pay Paiton Energy 4.93 cents per kwh for the power, compared to initial price of 6.0 cents per kwh.

Paiton Energy is partly owned by Edison Mission Energy, a unit of Edison

International , and also operates a 1,230 MW coal fire power generator in East

Java.

PLN has previously reached agreement with four IPPs including for the Tanjung Jati A project in Central Java, the Cilacap project also in Central Java, the Drajat project in West Java, and the Serang project in Banten.(Amoros)