PLN?s electricity supply cost declines

The 2016 electricity supply cost (also known as BPP) of state-owned electricity firm PT PLN at the national level has declined to Rp 983 per kWh (7.39 US cents per kWh) from Rp 998 per kWh ($7.45 cents per kWh) in the previous year.

The Ministry of Energy and Mineral Resources said in a statement on Monday that the 2016 national BPP will be used as reference for PLN in determining tariff of power to be purchased by the utility from independent power producers in the period of April 1, 2017-March 31, 2018.

The statement said that the 2016 BPP has been determined based on Minister of Energy and Mineral Resources Decree No. 1404 K/20/MEM/2017, signed on March 27.

?I signed the ministerial decree today. This is the result of audit by BPK (Supreme Audit Agency) and will be used as reference for PLN,? Minister of Energy and Mineral Resources Ignasius Jonan said in the statement, adding that the decline in the BPP reflects increasing efficiency in the production of electricity by PLN following the phasing out of costlier diesel-fired power plants and increasing number of coal-fired and gas-fired power plants.

BPP is the cost of electricity supply by PLN?s power plants excluding cost of distribution. BPP comprises of national BPP (average) and regional BPP. PLN will use the BPP as reference in determining tariff of power to be purchased from independent power plants. For example, a ministerial regulation issued recently stipulates that the tariff of electricity to be sold by IPPs from coal-fired power plants to PLN shall not exceed the national BPP.

Editing by Reiner Simanjuntak