State electricity utility PT PLN says it will urge Supreme Energy, the operator of the Gunung Rajabasa and Muara Laboh geothermal fields in Lampung and West Sumatra, to sign the delayed power purchase agreements for the two fields.
PLN president director Dahlan Iskan reported that his company had scheduled for the agreements to be finalized in July, but Supreme Energy declined to sign them because it was waiting for assurance from the government of PLN’s ability to pay for the power and fund the projects in the future.
“[Supreme Energy] is still waiting for clarification of the government’s guarantee for their projects. We actually planned to sign it coinciding with the launch of the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development [MP3EI] recently,” he told reporters on Thursday.
The 2011 ministerial decree on the guarantee of PLN’s businesses stipulated that the government would ensure that PLN was financially able to fulfill all the obligations of all the power purchase agreements, Dahlan explained.
Supreme Energy demanded that the government not only guarantee that PLN would not fall into bankruptcy, but also pay its financial obligations when the company failed to fulfill them, he added.
PLN’s new and renewable energy division head, Muhammad Sofyan, said that besides pursuing
certainty of PLN’s ability to meet financial obligations, the geothermal producer also requested that the government provide compensation if the geothermal projects were stopped due to future political or legal changes.
The geothermal power plants at the Gunung Rajabasa and Muara Laboh fields are expected to have a total capacity of 220 megawatts each.
PLN also had not signed its power purchase agreement with the Bakrie Group, the operator of the Sukoria geothermal field in East Nusa Tenggara, Dahlan reported. He added that the price offered by the company was Rp 1,200 (about 14 US cents) per kilowatt-hour, far above the ceiling price set by the 2011 ministerial decree on prices.
The Sukoria geothermal power plant is expected to have a total capacity of 30 megawatts.
The decree orders PLN to purchase electricity from geothermal producers at a ceiling price of 9.7 cents per kilowatt-hour.
Dahlan also promised that his company would reactivate the stalled project in Ulumbu, East Nusa Tenggara. He said that the 15-megawatt power plant would start generating electricity before Christmas.
“The electricity from the power plant will be a Christmas present for people living there,” he added.