VP, Hatta in the same boat on IPP: Official

Vice President Boediono and Coordinating Economic Minister Hatta Rajasa may have different opinions, but they are united on solving problems with independent power producers (IPP)s, says an official.  

Boediono’s spokesman Yopie Hidayat denied a story carried by The Jakarta Post on Tuesday, which reported a rift between the Vice President and Hatta.

Yopie said that both  state officials were concerned about finding a solution to the IPP problems.

He explained that Boediono and Hatta met on Jan. 18 to discuss IPP  problems with other public officials.

During the meeting, he said, differing opinions emerged before a consensus was reached.  

“In the meeting, Pak Boediono and Pak Hatta were one voice. Both wanted to help PLN [state power firm] to deal with the 50 IPPs. They all wanted to secure PLN from possible lawsuits,” Yopie said.

“All participants have a commitment to helping PLN and not to giving certain privileges to people who are close to the President,” he added.

The 50 IPPs, having gained operating licenses between 2004 and 2009, are largely owned by businessmen close to President Susilo Bambang Yudhoyono’s inner circle.

Despite the small capacity of combined IPPs, totaling 500 megawatts, the Cabinet included the resolution of IPP disputes in its 100-day program.

According to State-Owned Enterprises Minister Mustafa Abubakar, all problems related to IPPs would be resolved based on business-to-business principles, demanding the companies renegotiate their contracts directly with PLN management under the government’s supervision.

J. Purwono, the director general for electricity and energy utility at the Energy and Mineral Resources Ministry, explained that PLN had categorized IPPs into three categories.

The first category included IPPs that had secured financing and started construction. According to Yopie, there were five IPPs in the first category.

The second category included IPPs that had secured financing, but had not started construction. There were 12 in that category.

The third included IPPs that had signed power purchase agreements with PLN, but had not yet secured any financial commitments.

“PLN said it can only renegotiate with the first and second categories of IPPs,” Purwono said, adding the government would wait for the results from the (B2B) negotiations.

“IPPs basically want higher prices. We ask PLN to discuss this matter,” Purwono said.

He added the final results of the negotiation must be audited by the Development Finance Comptroller Agency (BPKP).

“Whatever PLN’s decision is, as long as it has been approved by the state auditor [BPKP] the government can approve it as well,” Purwono said.

He added the government was waiting for PLN’s decision and the BPKP audit.

PLN’s business and risk management director Murtaqi Syamsuddin, said the company expected to finish negotiations within a year.

 “We are working on it,” he said.

Murtaqi denied a report saying that PLN had dropped the negotiation with some IPPs.

“That information is inaccurate,” he said.