APR to Pull Out of Nias, PLN Makes Offer for APR Generators

The power crisis on the Nias Islands in North Sumatra drags on. American Power Rental (APR) Energy, the owner of the diesel power plants used to power the region, has announced it will stop operating in the area.

In response to this announcement, state electricity firm Perusahaan Listrik Negara (PLN) is considering buying APR Energy's power plants. PLN’s Senior Public Relations Manager Agung Murdifi is hoping that the US company will lose no time providing PLN with the generator specifications. (Read: PLN Vows to Resolve Power Crisis in Nias)

PLN will then conduct its due diligence and power appraisal. “Once we have detailed specifications, the administration and procurement of these generators will be easier. These generators could improve power services for Nias,” said Agung in Jakarta on Thursday, 19 May 2016. “And we really hope that APR will cooperate.”

Unfortunately, Agung continued, APR has not responded to PLN's offer to buy its generators. APR's 2x 10 MW generators in Idanoi and Moawo cost US$ 11.5 million. (Read: Nias to Resolve Power Crisis Soon)

Agung said that before PLN came up with the plan to buy these generators last month, it intended to extend the contract to rentthese generators until the end of December 2016. However, APR said it was only willing to extend the contract for two months, until 11 June 2016, because PLN was often late paying rental fees.

In response to these allegations, PLN claimed it had sent three letters asking APR to submit an invoice so PLN could pay the rental fees for the generators in Idanoi and Moawo. The state-owned firm has already paid half of the rental fee due for the APR generator in Medan, North Sumatra. The remainder will be settled when the ongoing external audit is completed.

To anticipate the worst possible outcome, PLN has put generators in place across Nias with a total capacity of 26 MW (24 MW plus 2 MW reserve capacity). A 13 MW generator has passed the feasibility test, and 5MW has been integrated into the electricity system, which is predicted to start operating at maximum capacity on 21 May. (Read: SOE Fails to Develop Dam, Power Plant)

Another generator, which has the capacity to produce 7 MW of electricity, is having a fuel pipe installed. This generator is estimated to start operating on 22 May. PLN has also readied a third generator with a capacity of 6MW in Teluk Dalam, which is scheduled to start operating on 29 May.

Previously, APR sent an open letter to the people of Nias informing them that APR would be permanently shutting down its generators, which have the capacity to produce 20 MW of electricity, at the end of this month. They blamed the shutdown on PLN’s failure to pay rental fees.

“The company did not honour our contract but continued to collect payments from the people of Nias for the electricity they used,” APR Chief Executive Officer John Champion said in this circular letter. “APR has no choice but to leave Nias at the end of May.”