Term sheet PLN, Paiton to be completed this month

The term sheet between the state-owned electricity company PLN and independent power producer Paiton I will be completed this month, according to Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

Purnomo was quoted by the Tempo daily as saying last week that completing the term sheet was one of the four major tasks that must be finished before the end of this year.

He said, however, that the power price was still open for further negotiation until a final agreement has been signed, expected to take place in March next year.

Paiton I is offering a price of 4.9 U.S. cents per Kwh. But the government and PLN are still trying to negotiate for a lower price.

Paiton is part of the 27 IPPs which singed agreement with PLN to provide the later with power supply. But the contract was terminated in the wake of 1997 financial crisis. PLN is under pressure to renegotiate the contract particularly the power price as some deemed as too high especially with the sharp decline in the value of the rupiah against the U.S.

PLN has so far only been able to reach agreement with three IPPs.(*)