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Luhut rejects PLN’s wish to review agreements with power producers
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Maritime Affairs Coordinating Minister Luhut Binsar Pandjaitan said a review of power purchase agreements (PPAs) would hamper investment. (tempo.co/File)
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aritime Affairs Coordinating Minister Luhut Binsar Pandjaitan has rejected a request from state-owned electricity firm PLN to review a power purchase agreement (PPA) with independent power producers (IPP), signed more than 10 years ago.
Luhut argued that such a review would hamper investment because it would put investors in difficult position. “The PPAs are final. Don’t evaluate them,” Luhut said at his office in Jakarta on Thursday as reported by tribunnews.com.
Previously, the Energy and Mineral Resources Ministry’s electricity Director General Agus Tribusono said the objective of the review was to lower electricity rates at the consumer level.
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He added that the review was reasonable because the power plant projects had not been constructed and there were also no binding agreements between the PLN and private companies.
According to the PPA, such a revision is possible as long as it is agreed upon by two parties, he added.
Meanwhile, Fahmy Radhi, a lecturer at Yogyakarta-based Gajah Mada University (UGM), said under the PPA, energy prices were too high, adding that the producers could understand the idea of such a review. As an example, PT Adaro Energy had maintained its contract with the lower price.
“It is in the interest of the state to offer more affordable electricity rates to the customers,” Fahmy added.
Meanwhile, Arthur Simatupang, from the Indonesian Private Electricity Producers Association (APLSI), supported Luhur’s argument, saying the PPAs had a strong legal basis. “If the contract is signed, it cannot be revised because it is legally valid,” he added. (bbn)
