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Pertamina and PLN struggling on reaching PPA for Lumut Balai geothermal plant

Geothermal pipes of Pertamina, Indonesia (source: zmiyatul.blogspot)
Alexander Richter 11 May 2018

Negotiations on an adapted price for electricity from the 55 MW Lumut Balai geothermal continue between developer Pertamina Geothermal Energy and PLN, with the government urging both parties to come to an agreement. The plant could go online later this year.

Reported this week from Indonesia, PT Pertamina Geothermal Energy, a subsidiary of PT Pertamina (Persero) still targets the start of commercial operations of its Lumut Balai geothermal power plant in Muara Enim, South Sumatra later this year. But so far, PGE has not been able to reach an agreement with PT PLN on the price for the electricity from the plant.

Khairul Rozaq, Director of Exploration and Development of PGE, said the determination of the purchase price of electricity between PLN and PGE has to go through several processes. After the power purchase agreement (PJBL) it will then have to be re-verified. The results of the verification are used as material or basis in the preparation of Head of Agreement (HoA). The agreed HoA must then be re-verified by the Financial and Development Supervisory Board (BPKP).

For PLTP Lumut Balai, the price of electricity in the agreed HoA is US $0.116/ kWh, which was approved by BPKP. However, PLN requested that the price be reviewed, as it is considered too high. The agreed on price is though in accordance with the HoA and BPKP verification and as seen the consideration of various factors, including the economics of the project.

The Head of Agreement was agreed upon and signed already in 2014 and now the decision liese with PLN before the official price is then be notified to the Minister of Energy and Mineral Resources.

“There will be another letter from PLN to the ESDM Ministry asking for price approval. The HoA signed in 2014 had a verification of a year, and is now refused by PLN in order to re-evaluate, “Rozaq said during a visit to PLTP Karaha Unit 1 in Tasikmalaya, West Java late last month.

In the initial stage of the negotiations between PGE and PLN agreed on an electricity price of $0.0753 cents per KWh. But that value has only been the initial value.

Ali Mundakir, Chief Executive Officer of PGE, said the management projected that the PLTP Lumut Balai geothermal plant can be completed by the end of this year or the fastest in October 2018.

“CoD target in addition to PLTP Karaha is hopefully in October or at least the end of this year hopefully will follow CoD in Lumut Balai 1 × 55 MW,” said Ali.

The government asked PT PLN (Persero) and PT Pertamina Geothermal Energy (PGE) to immediately discuss the price of electricity sold from geothermal power plants (PLTP).

Ida Nuryatin Finahari, Director of Geothermal of the Directorate General of Renewable Energy and Energy Conservation (EBTKE) of the Ministry of Energy and Mineral Resources (ESDM), said basically the government can not intervene on pricing between PLN and electricity developers. For this the only way is to reach a business deal so that the distribution of electricity to the community is not disturbed in the future.

Source: Dunia Energi, Dunia Energi