Star Energy writes off PLN?s debt of US$275 million

Singapore's energy firm Star Energy has written off US$275 million of the total $340 million debt owed by state-owned electricity company PT PLN to the company, Koran Tempo reported Monday.

Star's President Director Supramu Santosa said that the company?s move to write off portion of PLN?s debts was to comply with the agreement reached by the two companies on the price of power supplies from Star's Wayang Windu geothermal plant in West Java. Under the new agreement, the electricity price is set at 4.9 cents per kilowatt hour (kWh), while based on the previous agreement, the electricity was priced at 8.4 cents per kWh.

?Under the new agreement (on power prices), PLN is only required to pay its debt of US$65 million that can be done by installments,? said Supramu in Pengalengan, Bandung, West Java over the weekend.

Meanwhile, director for the primary power and energy at PLN Herman Ibrahim said that the agreement on power tariff had been reached after a long process. ?The agreed price does not exceed that set for a geothermal power plant in Salak and Darajat,? he said. He did not elaborate.

Energy and Mineral Resources Minsiter Purnomo Yusgiantoro said that the writing off of debts was the point considered by the government when it decided to approve the electricity price for Wayang Windu geothermal power plant.

According to Purnomo, many investors have also adopted a pattern that Star Energy and PLN apply in settling debt issue so that they can continue their old projects as they get cheaper power prices.

Purnomo said that the government and independent power producers (IPPs) have agreed to set selling power prices that do not exceed 5 cents per KwH. ?Except for Pare-pare in South Sulawesi where electricity charge is above 5 cents because it uses diesel oil as fuel,? he added. (*)