PLN to revise PPA of Sumsel 8 power plant project

State-owned electricity firm PT PLN and IDX-listed coal giant PT Bukit Asam Tbk (PTBA) are currently in talks to revise the power purchase agreement (PPA) of the planned 2x620 MW South Sumatra 8 mine mouth power plant project (or Sumsel 8), Bisnis Indonesia reported on Wednesday.

The paper quoted PLN Procurement Director Supangkat Iwan Santoso as saying that as part of the revision, the development of the US$1.6 billion Sumsel 8 project would no longer depend on certainty over the planned development of the high voltage direct current transmission (or HVDC) that would link South Sumatra and Java.

Under the existing PPA, PLN is required to issue letter of intent for the construction of the HVDC project to allow PTBA to start construction of the Sumsel 8 power plant project. ?This requirement will be eliminated,? Supangkat said.

PTBA Corporate Secretary Adib Ubaidillah confirmed that his company is in talks with PLN for the revision of PPA, which would allow the company to be ?flexible? in selling the electricity output from the Sumsel 8 power plant. This means that the electricity can be distributed in Sumatra, no longer entirely be allocated for Java.

Elsewhere, Supangkat said that PLN is currently conducting a review whether it would proceed with the HVDC project although it has been included in the 2006-2025 electricity procurement business plan of the company.

PTBA is teaming up with China?s Huadian Group to develop the power plant project. The joint venture company called PT Huadian Bukit Asam Power has already completed acquisition of the required 103 hectares land for the project, which has obtained funding commitment among others from Bank of China. (*)