S

tate electricity firm PT PLN plans to shut down four large oil-fired power plants this year to reduce the company’s growing oil consumption, the company’s top executive said.

PLN president director Dahlan Iskan said Thursday that the four plants were the Tambak Lorok plant in Central Java, Muara Karang and Tanjung Priok plants in North Jakarta, and the Muara Tawar plant in Bekasi, West Java.

“The planned shut down aims to reduce oil-based fuel consumption at our power plants,” he told reporters on the sidelines of a coordination meeting at the Energy and Mineral Resources Ministry in Jakarta.

He did not say if the plants would be later modified to enable them to use other fuel such as gas.

The company’s primary energy director Nur Pamudji said earlier that last year, PLN’s total oil-based fuel consumption reached 9.1 million kiloliters.

The company had set the consumption target at 6.4 million kiloliters in 2010, but the volume had to be revised to 9.2 million kiloliters due to a gas shortage at the Muara Tawar plant, he added.

Dahlan ensured that the shut downs would not disrupt electricity supply on Java island, because the company would soon start operations of coal-fired power plants in Suralaya of Banten province and Paiton in East Java.

“Power plants used to supply electricity to big cities on Java like Jakarta and Semarang still use oil-based fuels. With the operations of Suralaya and Paiton power plants, electricity supply for those cities will be taken over by the two plants,” he explained.

Besides Suralaya and Paiton, PLN also plans to begin operations of five other power plants this year. They are located in Lontar in Banten province, Pelabuhan Ratu and Indramayu in West Java, Rembang in Central Java, and Pacitan in East Java. The plants are part of the first phase of the 10,000-megawatt fast-track program.

Dahlan calculated that with soaring oil prices, the cost to subsidize oil-based fuel for PLN operations would surpass the government’s target of Rp 70 trillion (US$7.77 billion) in 2011, but he declined to give a definite answer on whether electricity rates would be increased.

“With the current high oil price, electricity rates may also increase. But it is the government and the House of Representatives that have the authority to decide on that,” he said.

The government set the cost of subsidizing oil-based fuel for PLN operations at Rp 70 trillion this year by projecting that the yearly average oil price would remain at $80 per barrel.

In December last year, the Indonesian Crude Price (ICP) stood at $91.37. Analysts have forecast that the oil price will reach $100 in the first quarter of this year due to extreme weather in the United States and Europe as well as the reluctance of the Organization of Petroleum Exporting Countries (OPEC) to raise its production quota.

“As long as the government still has money to subsidize, the decision [to raise electricity rates or not] will be in the hands of the government and the House,” Dahlan emphasized.