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PLN sets power purchase price

PLN sets power purchase price

Indonesian state power utility Perusahaan Listrik Negara (PLN) has announced that it has set a benchmark purchase price of $0.035/kWh for electricity generated by independent power producers (IPPs) in the country. The utility is renegotiating power purchase agreements with several IPPs under which it must pay for power produced in US dollars.

One option that PLN is considering in its negotiations is buying the power plant assets from IPPs. The government is currently seeking a loan that will enable it to buy the Tanjung Jati B power plant for $1.15bn. The international consortium that developed the Tanjung Jati A plant has also approached PLN with an offer to sell the plant for $1.05bn.

PLN said in August that it had paid only one third of its dues to a consortium led by Edison Mission Energy for power produced by the Paiton I power plant. Further low payments could lead Paiton`s lenders, which include the Export-Import Bank of Japan, to call a default on Paiton. It also failed to pay for electricity produced by CalEnergy`s Dieng geothermal plant.

Under long term contracts signed during the office of former President Suharto, PLN agreed to buy power produced by the IPPs at a price of $0.075/kWh. PLN has struggled to meet these payments, particularly since the fall in value of the rupiah.

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