PLN and Pertamina sign contract on Sarulla project

PLN and Pertamina sign contract on Sarulla project Muara, Lake Toba, Tapanuli Utara, North Sumatra, Indonesia (source: flickr/ Max Grabert, creative commons)
Alexander Richter 20 Feb 2013

PLN and Pertamina Geothemral have signed joint operation and sales contracts for the Sarulla project in Indonesia, but certain taxation issues remain an obstacle to keep timely schedule of the project.

News from Jakarta report that Indonesian state utility PLN with Pertamina Geothermal Energy (PGE) has signed a joint operation contract and an energy sales contract for the geothermal power plant project of Sarulla in Indonesia.

The contracts were signed on Tuesday, February 12 and PGE on Thursday, February 14, “said President Director of PLN Nur Pamudji.

Pamudji added to the purchase of electricity from geothermal power plants Sarulla, PLN has to agree for a long time, the price of $6.7 cents per kilowatt hour (Kwh).

“The price was the result of the auction years ago” he added. Pamudji estimates that the Sarulla geothermal power plant will begin operations in 2016, with an initial capacity of 110 MW and a target of 3×110 MW in capacity for a total of 330 MW.

While PLTP Sarulla capacity is expected to reach 600 mw.

Despite the contracts there still seems to be an issue regarding an approval from Sarulla Operations Limited (SOL) related to the transfer of assets from Sarulla PGE.  The transfer these assets still have to wait for the SOL to come from Japan. In addition, the SOL is still waiting for confirmation from the Directorate General of Taxes (DGI tax) related to the transfer tax asset Sarulla. ThinkGeoEnergy reported on the taxation issue here before.

Rida believes PLTP Sarulla project can start operation according to the schedule in 2016.

The auction and transfer agreement was signed in 2007 following an auction. However, until now it has not been realized because the consortium Sarulla can not pledging assets to secure loans. Though the capacity of 330 mw PLTP should have started flowing “steam” since last year.

Currently the power generation demand in the region is at about 1,480 MW. While peak load reached 1200 MW.

PLN and SOL have signed a power purchase agreement with the electricity price USD 6.7 cents per kilowatt hour (kWh) to the escalation of 2 percent per year. Initially, PLTP Sarulla project was initiated in 1994 by Unicoal North Sumatra Geothermal . However, it was later taken over by PLN in 2003 because there was no agreement on price in the arbitration of Unicoal bail-out of $ 70 million. PLN then auctioned off the project and eventually it was acquired by a consortium of SOL, which is 37.5 percent of Medco, Kyushu Electric (Japan) 25 percent, Itochu Corporation (Japan) 25 percent, and Ormat International Inc. (USA) 12.5 percent.

Source: Okezone