President Susilo Bambang Yudhoyono has promised that Indonesiaâ€™s power crisis will end this year. Yudhoyono said on Thursday that he had released a presidential decree and supporting regulations to ensure his promise will be kept.
â€śThe goal will be reached by buying excess power from factories, expanding PLNâ€™s [PT Perusahaan Listrik Negara] transmission and distribution network, and encouraging private producers to develop more power plants,â€ť he said.
The government is also preparing a new regulation to provide more incentives for independent power producers to generate electricity, he said.
Coordinating Minister for the Economy Hatta Rajasa said earlier that PLN has until October to end the power shortages that have plagued Java and Bali.
The government has approved PLNâ€™s proposal to increase its sales margin from 5 percent in 2009 to 8 percent, or Rp 11.2 trillion ($1.19 billion), this year.
On top of that it is injecting Rp 10 trillion into the electricity company from the state budget in a one-off payment aimed at ending the power shortages.
PLN president director Dahlan Iskan has said the 10-month target would be difficult to achieve. â€śIt will be extremely hard,â€ť he said.
According to PLN data from October, 11 of the countryâ€™s 24 electricity systems were suffering from a power deficit and 11 others were on alert status with no spare supply.
In Jakarta, PLN is planning to spend Rp 9 trillion in 2010 and 2011 to build new transformers at its plants in Gandul, Balaraja, Kembangan, Bekasi, Muara Tawar and Cawang.
In the 2010 state budget, the government allocated a subsidy of Rp 35.3 trillion to PLN as well as Rp 2.5 trillion carried over from 2009â€™s budget. This is well below the Rp 50 billion PLN requested.
On Thursday, State-Owned Enterprises Minister Mustafa Abubakar said the second unit of a coal-fired plant in Labuan, Banten, with a capacity of 300 megawatts, would be operational by March.
â€śThe plant will contribute to reducing [PLNâ€™s] electricity subsidy as it will significantly cut the usage of diesel,â€ť Mustafa said.
PLN estimates the cost of using coal to generate electricity is about 20 percent of the cost of using diesel.
Also on Thursday, Yudhoyono opened a new 230 MW coal-fired plant Labuan Angin, Sibolga, North Sumatra.
Indonesia is aiming for the completion of 150 independent power producer generating projects, with a total capacity of 1,000 MW, by the end of 2011.
Mustafa said the IPP projects would cut PLNâ€™s production costs by Rp 20 trillion a year.
To encourage IPP projects, the government has agreed to allow PLN to purchase power from private producers at a viable price, Mustafa said.
â€śThe [price] negotiations will be conducted between PLN and the IPPs,â€ť he said.
PLN intends to re-start 40 generating projects involving IPPs within a year.
Murtaqi Syamsuddin, PLNâ€™s director of business and risk management, said PLN would review the projects until March and would then begin to negotiate with IPPs.
PLN had signed contracts with IPPs to develop the plants, but a lack of financing had stalled some, while others were still under construction.
Still others had been completed, but were not producing power because the IPPs were not able to operate them at a profit.
Other problems include disputes over how much PLN would pay for the power and how much the IPPs would pay for coal.