Indonesia to renegotiate Paiton

Indonesia`s private power producer PT Paiton Energy Company is ready to renegotiate the contractual terms of its power purchase agreement (PPA) with state-owned utility Perusahaan Listrik Negara (PLN).

Under the existing PPA, PLN would buy electricity from Paiton at 7.5 cents/kWh for 30 years. But faced with the depreciation of the rupiah, PLN is trying to renegotiate the contract.

Speaking to the Jakarta Post, Paiton`s president commissioner Hashim Djojohadikusomo said: “Our foreign partners in Paiton Energy, realizing the difficulties faced by PLN, are ready to reach a compromise…our partners are ready to reduce their return on investment.”

The 1230 MW plant recently came on line but PLN has refused to buy power from the plant and has only paid for the cost of the fuel. The government considers that PLN has the right not to pay for the electricity since the plant is still in the commissioning phase.