State power company PT PLN holds the mandate to set power purchase prices to buy electricity produced by its business partners, aiming at flexibility amid the dynamics of economic circumstances, an official said, The Jakarta Post reported.
The Director General for Electricity and Energy Utilization at the Energy and Mineral Resources Ministry, J. Purwono, said that the rights were based on the Energy and Mineral Resources Ministry’s regulation, the Guideline for Power Purchase Prices for Cooperatives or other Independent Power Producers (IPPs), enacted last week.
Purwono said purchase prices were determined by various indicators, including the type of power plants, their locations and their capacities; macro-economic indicators; the level of local content; fuel prices; quality; and foreign exchange rates.
“This is the reason why PLN can set different prices for different business deals,” he said. Purwono added that PLN should first receive the government’s agreement before implementing prices.
He said that the government will play a bigger role in determining the parameters for power purchase prices. Earlier this year the government announced it would set the standard for power purchase prices at $0.58 cents to $0.8 cents per KWH. The IPP winner and the power purchase price could be established through several mechanisms, including open bidding, direct appointment or direct selection. IPPs are expected to generate about 40% of PLN’s second-phase 10,000 MW power program, expected to start adding capacity in 2014. In the first-phase program, launched in 2006 to meet the increasing demand for electricity nationwide, especially for the Java-Bali system, all power plants belong to PLN.