PLN likely to withdraw bid for two geothermal assets of Chevron

PLN likely to withdraw bid for two geothermal assets of Chevron Darajat Unit I owned by Indonesia Power (a PLN subsidiary) with steam supplied by Chevron (source: wienblog-growingtree/ blogspot)
Alexander Richter 2 Nov 2016

State-owned utility PLN has indicated a possible withdrawal of its bid for the Mt. Salak and Darajat geothermal assets of Chevron in Indonesia, due to the lack of detailed information ahead of the end of bidding.

Indonesian, state-owned electricity company PLN is likely to withdraw its bid to take over two geothermal assets offered for auction by US-based energy corporation Chevron, as reported by the Jakarta Post.

In a comment to media, PLN states that it has not been provided with audited financial reports for its subsidiaries of Chevron Geothermal Indonesia and Chevron Geothermal Salak. These entities are operating the two geothermal assets of Chevron that PLN had shown interest in.

As the auction deadline had been set for Monday this week, PLN now sees a bid too risky without detailed description of third-party obligations, including its tax extensions. There are claims of outstanding taxes of Chevron with the authorities in Indonesia.

PLN was interested to acquire the Mount Salak and Darajat geothermal fields in West Java. There value is estimated at a combined US$3 billion.

The company raises also concerns about the permits for both fields as they are located in a conservation area and could be terminated.

Today, PLN already has a power purchase agreement in place to buy electricity from the Mt. Salak and Darajat geothermal power plants, wich have a power generation capacity of 377 MW (at a PPA price of $0.0663/kWh) and 255 MW (at a PPA price of $0.0705/ kWh), respectively. The PPA had recently been extended until 2040 and therefore would apply to a buyer of the assets of Chevron.

There have been six groups or companies in the running for these assets and include PLN, state-owned oil and gas giant Pertamina, Japan-based diversified company Mitsui, Japanese trading house Marubeni and local firms Medco and Star Energy, according to the Energy and Mineral Resources Ministry. The auction winner is scheduled to be announced in January.

Meanwhile, the Indonesian Geothermal Association (API) claims that PLN’s ability to maintain and develop the two geothermal fields is questionable.

Chairman Abadi Purnomo, who is also a member of the National Energy Board (DEN), said that PLN should focus on building more power plants under the government’s 35,000 MW project. Acquiring the Salak and Darajat geothermal fields, Abadi said, would not fulfil that objective and would only waste funds that needed to go into the project.

“Furthermore, PLN is not competent enough in the upstream geothermal sector,” he told The Jakarta Post, citing Pertamina as a more fitting owner of the geothermal fields as it had the equipment and human resources needed to develop geothermal energy.

Source: The Jakarta Post