Leony Aurora, The Jakarta Post, Jakarta
State power firm PT PLN may see some Rp 1.34 trillion (US$144 million) in cost savings from its program to replace the use of high speed diesel in some power stations with cheaper fuel oil, an official says.
PLN has identified about 45 small diesel-fired power plants outside Java that could be converted to fuel oil, the company's deputy director of primary energy, Tonny Agus Mulyantono, said on Monday.
""If all of them were converted, we could replace some 800,000 kiloliters of high speed diesel with fuel oil annually,"" said Tonny, adding that the necessary feasibility studies and risk analyses were still ongoing.
""We are also waiting for confirmation from Pertamina about supplies,"" he said.
After the government removed the subsidy from the fuel used to generate power in September last year, the fuel oil price has generally been between Rp 1,400 and Rp 2,000 lower than diesel. For March delivery, diesel is priced at Rp 5,043 per liter, while fuel oil is sold for Rp 3,600 a liter.
PLN will need to install new equipment to handle the thicker fuel oil, said Tonny, and this would take between six and eight months.
""We will only see the benefits of this program next year,"" he added.
The substitution program would be applied to stand-alone, small-scale power plants outside Java that are only capable of being supplied with diesel due to transportation difficulties.
Pertamina's fuel division head, Djaelani Sutomo, said that the state firm was in the process of converting storage tanks in Banjarmasin to hold fuel oil for the supply of power plants in Kalimantan and Ampenan, Lombok, West Nusa Tenggara.
Power plants in some remote areas, such as Jayapura, Papua, may not be converted to fuel oil as the volumes involved would be too small to justify the high transportation costs, he said.
PLN is under pressure to cut costs amid a heated debate over the necessity of power price increases this year. The company says that due to continuing high prices for oil-based fuels, it needs an additional Rp 38 trillion to cover costs and keep operating this year in the absence of an increase in power prices.
The government allocated PLN a maximum subvention of Rp 17 trillion in the 2006 budget.
Meanwhile, Tonny said that PLN was in discussions with Pertamina and state gas distributor PT PGN to secure gas supplies for its plants that currently burn high speed diesel in Jakarta.
Each company may supply up to 100 million standard cubic feet of gas per day starting mid 2007, said Tonny. The Pertamina gas would come from its Pagardewa field in South Sumatra, while the PGN supply would come from the ConocoPhillips' field in the same province.
""Hopefully, we will sign a Memorandum of Understanding in mid March,"" said Tonny.
