Indonesia seeks to reassure investors

Indonesia seeks to reassure investors

The Indonesian government sought to reassure investors, lenders and operators of independent power projects after state utility PLN said it was reviewing power purchase agreements to see if the crisis could be declared a “force majeure”.

The government said it hoped to resolve contract disputes soon with IPPs which complained they were not getting paid by the cash-strapped utility.

The fall of the rupiah means that the price PLN pays for power from the IPPs is costly since the power purchase agreements were negotiated in dollars while it sells in rupiah.

The news follows Moody`s Investor Service downgrading of three large Indonesian power projects warning that bonds issued to support the schemes ran the risk of default.

The problems come at a time when the government is considering a new proposal to raise the base electricity tariff. The new proposal is a re-evaluation of the second stage of a tariff rise which was to be introduced in August but was postponed because of public opposition.

– The Samarinda combined cycle power station being built for PLN by Rolls-Royce is nearing completion. The plant is PLN`s first aeroderivative gas turbine combined cycle plant and will generate 66 MW when operating at base load.

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