PLN obliged to buy electricity from independent power producers

State electricity company PLN is obliged to buy electricity from independent power producers (IPPs) under a new regulation issued last week to ease uncertainty in the development of geothermal power plants in the country, Kompas reported on Tuesday.

Director General of New and Renewable Energy Sugiharto Harsoprayitno said in Jakarta on Monday that the Energy Minister?s decree No. 2/2011 also set the ceiling price for the purchase of geothermal power at 9.7 US cent.

He said that the state electricity company is obliged to buy electricity from geothermal power plants auctioned to the private sector as part of the government?s electricity development program.

?The price for geothermal power is based on the result of the bidding process and could not be changed,? he said. However, if the price of the power fixed before the issuance of the regulation exceeds the ceiling price, it could be negotiated and the change should be approved by the energy minister.

Chairman of the association of the geothermal power producers Surya Darma hailed the government?s decision, saying that it would ease uncertainties faced by a number of companies which have won the tender but could not begin the projects due price uncertainties.

He, however, said that the regulation could not be immediately implemented because PLN would need an assignment letter from the government to carry out the new policy. (*)