Uncertainties over gas supply hampers Bontang power project

Uncertainties over gas contracts have hampered the construction of a new power plant in Bontang, East Kalimantan although the local legislators have tried hard to help break the deadlock in the negotiation over the gas supply to the new power plant, local newspaper Kaltim Post reported on Monday.

The legislative council of the Bontang regency had changed the formation of the special committee for the construction of the new power plant for at least three times to smoothen the negotiation of the gas supply.

The new team, established recently, had successfully mediated the negotiation process between Pertamina, the gas supplier and the state electricity company PLN as the buyer. "But due to the difference over the pricing, more negotiations should be held to break the deadlock," said legislator Abdul Choliq Hidayat.

He said Pertamina and PLN had agreed to set the price of gas at US$2.65 per mmBTU, including fee. The negotiation, however, suffered a setback because Pertamina demanded the agreed price to be applied for a contract of up to 5.5 years, while PLN wanted the price to be applied for a contract of up to 11 years.

Pertamina said that the price should be increased to US$3 per mmBTU if the contract is extended to 11 years.

Choliq said that his team would meet PLN on March 31, and Pertamina, BP Migas as well as the investor PT Altra Investama later on April 1 to solve the problem.(*)