Sengkang mulls arbitration proceeding against PLN over payment

The owner of the gas-fired combined-cycle power plant in Sengkang, South Sulawesi is mulling bringing state-owned electricity company PT PLN to arbitration following the latter's failure to pay the former for its power supplies in September this year, a source at the ministry of energy and mineral resources said.

The source told Petromindo.Com PLN should had paid PT Energi Sengkang US$30 million in September for its power supplies.

Energi Sengkang had repeatedly asked PLN to make the payment but PLN had thus far given no clear response.

The independent power producer needs the money very much to fulfill its financial obligations to lenders, the source said.

The source noted that Energi Sengkang was one of the few IPPs, which have been showing tolerance and compromising attitude towards PLN amid the state company's financial problems.

According to the source, Energi Sengkang has agreed to cut the price for its power supplies to less 5 US cents per kilowatt hour (kWh) from the contractual price of 6.7 cents. PLN has extended the power purchase contract with Energy Sengkang to 25 years from the initial contractual period of 20 years in return for the cut in the power price.

Energi Sengkang had also agreed to accept payments based on the rupiah rate of 2,400 per US dollar as against the current rate of above Rp 9,000 with the balance to be considered as PLN's debt to the company.

The Sengkang power plant has the power generation capacity of 135 Megawatt. It now operates at 80 percent of its capacity.

The company was owned by American gas company El Paso (47.5 percent), Australian firm Energy Equity (47.5 percent) and Trihasra (5 percent), which is controlled by former President Soeharto's daughter Siti Hardiyanti Rukmana a.k.a Tutut. El Paso has reportedly bought Tutut's shares. (Amoros)