Pertamina and PLN resolve price dispute for Kamojang

Pertamina and PLN resolve price dispute for Kamojang Kamojang geothermal plant, Indonesia (source: ThinkGeoEnergy, creative commons)
Alexander Richter 8 Jan 2016

Pertamina Geothermal Energy (PGE) and PLN reach agreement over steam price for Units 1, 2 and 3 of the Kamojang geothermal power plant complex in West Java, Indonesia.

Following several editorials about the danger of a lingering conflict of the pricing dispute between PLN and Pertamina for the Kamojang plant, power supply in the region, but also for the geothermal development in Indonesia in general, the conflict now seems to have been resolved.

State-owned PLN and Pertamina, have secured a new agreement on the price of steam from the Kamojang geothermal plant, after State-Owned Enterprises Minister Rini Soemarno mediated negotiations, as reported by the Jakarta Post.

In a statement this morning, the boards of directors for both companies announced the decision to end the disagreement for the public interest.

As part of the new contract, the price of steam from the Kamojang plant’s units 1, 2 and 3 as well as four units of the Lahendong plant was confirmed at $0.06 per kWh (back in July 2015 it was reported to be $0.062/ kWh). The price for unit 4 of the Kamojang plant was secured at $0.094/ kWh and is based on the price for unit 5 which was set at the same level.

In the news, it is reported that the prices for unit 4 and 5 are $94 per kWh for the steam, which we assume to be incorrect. Apart from the price being likely more for a price per MWh, it is likely for the power and not the steam. Pertamina is providing the steam for the power plant of PLN at Kamojang, units 1, 2 and 3. Units 4 and 5 are actual power plants by Pertamina Geothermal and therefore we assume that the price mentioned is is rather for the electricity from those units and not the steam price.

The price agreement is to be set out in the new contract, which will help PLN and Pertamina to boost to 23 percent the portion of renewable power in the country’s energy mix by 2025, in line with government targets.

The agreement was reached quickly, as the price of steam was audited by the Agency for Supervision of Development Finance (BPKP). The development scheme at Kamojang is somewhat unique in that Pertamina Geothermal Energy (PGE) is responsible for drilling wells to produce steam, while PLN owns and operates units 1, 2 and 3 of the Kamojang geothermal power plant complex. Under the long-term deal, PLTP Kamojang (PLN) purchases the steam produced by wells operated by PGE.

Source: Jakarta Post, Rambu Energy