JAKARTA: 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.
PLN claims that Chevron has not provided it with the audited financial reports of its subsidiaries Chevron Geothermal Indonesia and Chevron Geothermal Salak, which operate the two geothermal assets PLN has been eyeing. To date, PLN is in the running to take over Chevron’s Mount Salak and Darajat geothermal fields in West Java, which are estimated to be worth a combined US$3 billion.
PLN director for corporate planning Nicke Widyawati said the company had sent repeated requests to Chevron to send the audited reports as the auction deadline had been set for Monday.
Putting in a bid for the geothermal assets was seen as risky as PLN needed to have a detailed description of Chevron’s third-party obligations, including its tax extensions. PLN claims that the Supreme Audit Agency (BPK) reported that Chevron still had outstanding tax it needed to pay.
Furthermore, the state-owned company claimed that the permits for both geothermal fields to be developed in a conservation area would soon be terminated, which was not detailed in the unaudited report received by PLN.
“We have not received an audit from the owners of the geothermal fields. Based on existing regulations, we cannot and should not conduct valuations based on unaudited reports because an audited report is not just to be evaluated, but also contains any obligations for third parties. There may also be legal issues we need to know about,” Nicke told reporters on Monday.
PLN already has a power purchase agreement (PPA) to buy electricity from the Mt. Salak and Darajat geothermal power plants, which have a generating capacity of 377 megawatts (MW) and 255 MW, respectively.
The company buys electricity from the Darajat field for 6.63 cents per kWh and from the Mt. Salak field for 7.05 cents per kWh. The PPA has recently been extended until 2040. However, Nicke said that PLN did not have any obligation to extend it further or apply a price adjustment in the contract.
The six companies in the running for the geothermal fields are 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.
