PLN proposes power price be increased to 7 cents in five years

Wednesday, December 20 2000 - 04:00 AM WIB

State electricity company PT PLN said on Tuesday it was seeking the government's approval for the proposal to gradually increase selling prices for its power up to seven U.S. cents or Rp 595 at the rate of Rp 8,500 per dollar per kilowatt hour (kWh) in five years.

PLN's president Kuntoro Mangkusubroto said the selling price would be attractive enough for investors to continue investing in the country's power infrastructure development.

"If this competitive price is not approved, it is feared that no investors will be interested to invest in new power plants. As such, the government has to invest a lot money to build new power plants by itself to cope with power shortages, which are expected to occur in 2003," Kuntoro said in a statement distributed during a press conference.

Today, PLN sold its power at an average price of Rp 300 per kWh, he said.

Kuntoro also said PLN was proposing that the government cut set gas price for PLN to $1.5 million British thermal unit (MMBTU) from between $2.5 and $3 per MMBTU at present. The price demanded by PLN was similar to the one imposed by the government for state steel company PT Krakatau Steel.

PLN had also asked the government take over the company's financial obligations, including short-term loan, interest and principal payments and sub-loan, and convert them into the government's additional equity in the company, Kuntoro said.

He further said PLN had also asked the government revalue the company's assets, which were currently undervalued based on the rupiah rate of Rp 2,500 or higher against the dollar. This has caused a misleading perception about the company's production cost.

Kuntoro also explained that PLN had reached interim agreements with the owners of the Paiton I and Paiton II power projects in Probolinggo, East Java during the renegotiation on their power purchase contracts.

PLN and the owners of the two power projects are still negotiating to reach long-term agreements on the contracts, he said.

PLN had also reached a long-term solution with PT Amoseas on the purchase of power supplies from its geothermal power plant in Drajat, West Java, while settlement agreements had been reached with PT Citra Kartika Daya, which owns the coal-fired power plant project in Cilacap in Central Java, and with PT Tanjung Jati A Power Co, which owns the coal-fired power plant project in Tanjung Jati, Central Java, Kuntoro said. (Godang)

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