PLN renegotiates contract with Siemens and partners
Wednesday, January 3 2001 - 05:00 AM WIB
State electricity company PT PLN is seeking to reach an agreement with a consortium led by German firm Siemens AG on the changes in their power purchase contract after a similar effort gained a cool response from a consortium led by American firm Mission Energy.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said PLN hoped to reach an agreement with Siemens and partners on the pricing scheme which could become a benchmark for the price for the power supplies from Mission Energy and partners.
Siemens and partners, including Indonesian firm PT Bumipertiwi Tatapradipta, which is controlled by former President Soeharto?s son Bambang Trihatmodjo, has established PT Jawa Power, which has built a 1,220-Megawatt (MW) coal-fired power plant in Paiton, Probolinggo district, East Java. The power plant is popularly called Paiton II.
Mission Energy and partners, including PT Batu Hitam Perkasa, which is controlled by local tycoon Hashim Djojohadikusumo, has established PT Paiton Energy, which has built a 1,230-MW coal-fired power plant in the same location in Paiton. The power plant is popularly called Paiton I.
Purnomo said the government had ordered PLN to negotiate with Paiton Energy for a long-term agreement on the changes in their power purchase agreement (PPA) but thus far the effort brought no fruits.
?Since Paiton I has thus far given no response, we decided to negotiate with Paiton II. We hope to reach an agreement with Paiton on the pricing scheme that could be used as a benchmark price for Paiton I,? Purnomo said during the tour to inspect PLN?s facilities on the New Year?s Eve.
Under the 30-year PPA, PLN has to buy power supplies from Paiton Energy at the price of 8.4 US cents per kilowatt hour (kWh) in the first nine years. The price will gradually fall to 5.4 cents.
Jawa Power however sells its power to PLN at the flat price of 6.6 cents per kWh for 30 years.
Purnomo also said PLN has reached an agreement with the United States government-owned insurance firm Overseas Private Investment Corporation (OPIC) on the payment scheme for the $290 million insurance claim, arising from the state company?s failure to honor the PPA with MidAmerican Energy Holding.
Both had agreed to use the Paris Club payment scheme for the payment of the insurance claim, he said.
They also agreed to cut the insurance claim to $260 million, he said, but did not provide details.
Paris Club is a group of creditors for Indonesia, which early last year agreed to reschedule $5.8 billion in sovereign debt.
Under the agreement with the club, the Indonesian government can pay the debt in 20 years, including a grace period of four years, with an interest rate of one percentage point above the rate set by the creditors? respective central banks or monetary authorities.
OPIC?s insurance claim surfaced after PLN failed to pay MidAmerican $572 million in compensation as ordered by an arbitration panel in 1999.
PLN was brought to the panel because it refused to pay MidAmerican for power supplies from its geothermal power plant in Dieng, Central Java and after the government suspended MidAmerican?s power plant project in Patuha, West Java.
MidAmerican called in OPIC insurance because PLN could not pay the compensation. (godang)