RI agrees to continue Tanjung Jati B project

Following months of negotiations, the government has finally agreed to continue the Tanjung Jati B power project in Central Java.

?In principle, the government has approved the plan to continue the Tanjung Jati B, but we still need further discussions with the Finance Ministry,? Eddy Widhiono, president director of state utility company PT Perusahaan Listrik Negara (PLN), told the press after a limited Cabinet meeting on economy in Jakarta on Wednesday.

The approval is part of the government?s effort to anticipate electricity crisis in 2003/2004, Widhiono said.

The debt-laden PLN has tried to renegotiate power purchasing contracts with the so-called Independent Power Producers (IPPs).

Under the contracts made under the corrupt Soeharto regime, PLN must buy electricity from the IPPs at a much higher rate than its selling price.

Worse still, PLN pays in US dollar but receives income in rupiah.

?We want to have objective negotiations with the IPPs so that the electricity tariffs will be affordable to the people,? Widhiono said.

Japan?s Sumitomo Corp. is the contractor and a major shareholder of the Tanjung Jati B project, which has production capacity of 1,320 megawatt.

The government has completed renegotiation with three IPPs that manage the Darajat, Tanjung Jati A and Cilacap power projects.

Results of the renegotiation include the continuation of the Darajat and the Tanjung Jati A projects, and the termination of the Cilacap project.

?We?re still negotiating the fate of other power projects,? Widhiono said.

The government has signed a total of 27 power-purchasing contracts with the IPPs. (*)