February 27, 2020 / 11:23 AM / a month ago

Indonesia's PLN signs initial 20-year deal to buy gas from Pertamina

JAKARTA, Feb 27 (Reuters) - Indonesia’s state electricity company PT Perusahaan Listrik Negara (PLN) signed an initial deal to buy 167 billion British thermal unit of gas per day from PT Pertamina for 20 years, as it slashes the use of diesel fuel.

The Indonesian government has urged the electricity utility company to cut its use of diesel power plants. PLN has said it aims to reduce diesel consumption by more than 60% within two years.

The state energy company Pertamina will supply liquefied natural gas (LNG) to PLN’s power plants in 52 locations within two years with combined capacity of 1,870 megawatt, Pertamina Chief Executive Nicke Widyawati told reporters.

Pertamina will start delivering gas this year to five power plants with 430 megawatt combined capacity, Widyawati said.

Fuel costs for the 52 locations would be reduced to around 12 trillion rupiah ($855 million) per year, from about 16 trillion now, by converting diesel power plants to gas, PLN Chief Executive Zulkifli Zaini said.

Cutting diesel fuel imports is one of President Joko Widodo’s top priorities to reduce the current account deficit.

“Other than cost efficiency, this will also contribute to reduction of (carbon) emission,” said Indonesia’s Energy and Mineral Resources Minister Arifin Tasrif, who attended the deal signing.

Pertamina will invest $1.3 billion in regasification units for PLN’s remotely located power plants that cannot be reached by pipelines, Widyawati said.

$1 = 14,030 rupiah Reporting by Wilda Asmarini Writing by Fransiska Nangoy

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