People in most parts of Central Sulawesi will soon have electricity again after state power utility PLN agrees to settle the price on the power purchase agreement for the crucial coal-fired Tawaeli power plant, an official says.
PLN’s president director Dahlan Iskan said in Jakarta on Tuesday that the power plant with a capacity of 2 x 15 megawatts (MW) had stopped operations for several months causing prolonged blackouts in many parts of the province especially in the provincial capital of Palu.
The plant operator PT Pusaka Jaya Palu Power had decided to stop the operation of the plant because the price paid by PLN to buy the power from the plant was too low to cope with the operating costs.
Dahlan told this to journalists after a hearing with Commission VII of the House of Representatives overseeing energy, mineral resources, research and technology and the environment.
The hearing was also attended by director general of Electricity and Energy Use Jackobus Purwono and director general of Mineral, Coal and Geothermal Bambang Setiawan from the Energy and Mineral Resources Ministry.
The director general of Budgeting within the Finance Ministry Anny Ratnawati, who is tipped to be the most likely replacement for Finance Minister Sri Mulyani Indrawati, also attended the hearing.
PLN claimed it was unable to increase its power purchase price at Tawaeli because if it did so it would violate the government’s regulation which limited the purchasing price from independent coal-fired power plants to Rp 470 per kWh, he said.
“The price cap had been removed so that we will be able to renew contracts with a new price,” he said.
According to Dahlan, PLN had agreed to raise the price to Rp 750 [US$0.08] per kWh from Rp 500 per kWh. Insya Allah [God willing], we will settle the price deal by the end of this week so it [Tawaeli] can resume operations,” he added.
Tawaeli power plant, built with an investment of about $29.9 million began commercial operation in 2007.
Dahlan claimed, based on a ministerial decree, that PLN could not buy electricity from a coal-fired power station provided by an independent power producer (IPP), including the Tawaeli owner, at a price exceeding Rp 470 per kWh. But the decree has already been removed.
During the hearing, Dahlan said that the government was committed to resolving the Tawaeli power plant case which had led to prolonged blackout. Pricing problems also hampered the development of the country’s geothermal power sector.
He said that the government had set the price of geothermal power plant at 9.7 cents per kWh, far higher than the average selling price of PLN which is only 6.5 cents.
“It means that the price gap could cause a deficit of Rp 5 trillion for the purchase of 3,977 MW of power
to be produced by geothermal power plants which would be built under the second 10,000 MW power development program,” he said, adding that the government should provide an additional subsidy of Rp 5 trillion to cover this deficit.
The government is pushing forward a major expansion of geothermal energy and new geothermal working areas under the second 10,000 MW power plant program.
The program is expected to be started this year and it is planned to be largely completed by 2014 although geothermal power stations can take five to six years to build from greenfield site.
PLN says the total power capacity to be generated from the second 10,000 MW program could reach an estimated 10,677 MW.
Of this total power output, as much as 12 percent would be generated from hydro power; 15 percent from gas-fired combined-cycle power plants; up to 40 percent from geothermal energy and 33 percent from coal-fired power stations.
