PLN to offer special power tariffs for industries

State electricity company PT PLN will offer large industrial users special power tariff rates under long-term contracts to help both sides cope with foreign exchange fluctuations.

PLN president Kuntoro Mangkusubroto said on Thursday that his company was drafting long-term contracts that would offer corporate users better service for a higher price.

"When our customers want better quality, we can give them that," Kuntoro told reporters in a press meeting.

He said that in return the company would charge a premium price in accordance with the quality it offered, including assurance of no blackouts.

PLN has been warning the government that inadequate investment expansion in power generation will threaten the country's power supply in the near future.

According to the state company, power demand growth has returned to its pre-crisis level of 12 percent a year, and would soon outstrip the current power supply capacity.

PLN's director for marketing and distribution Eddie Widiono said offering long term contracts served as PLN's efforts to deal with demand fluctuations.

Long term contracts, he said, would include calculations to minimize the risks of foreign exchange fluctuations.

"Beneath the long term contracts lies PLN's wish to match its U.S dollar dominated costs with the revenues in rupiah," he explained.

A large portion of PLN's costs are set at U.S dollar rates, particularly the purchase of electricity from independent power producers (IPP), and natural gas from state owned oil and gas company Pertamina.

Eddie said that the power tariffs could either be fixed throughout the contract's period or be pegged at a certain variable. The contracts terms and conditions, he said, would vary from one company to another since PLN planned to negotiate them individually. (*)