Indonesia, Singapore and Malaysia agreed on Thursday to build three interconnected power transmission networks using up to US$1 billion in investment.
Indonesian Energy and Mineral Resources Minister Purnomo Yusgiantoro said the agreements, signed at the sidelines of an ASEAN Energy Ministries Meeting in Singapore, was part of the ASEAN Power Grid project.
Under the agreement, Indonesia, which is represented by state-run electricity company PLN, and its partners from the two neighboring countries would jointly build three power transmission lines connecting Sarawak in Malaysia with Pontianak in West Kalimantan; Penang in Malaysia with Riau in Sumatra; and Singapore with Batam and Bintan in Riau Islands.
In the short-term, PLN would use the cross-border transmission networks to buy electricity from either Singapore or Malaysia to cope with the electricity shortages in Sumatra and Kalimantan, the minister told The Jakarta Post.
In the long-term, PLN, which is currently engaged in a crash program to provide an additional power supply of 10,000 megawatts by the end of 2009, may be able to use the facilities to sell its power surplus to the two neighboring countries.
"In the future, we could take advantage of gas production from the Natuna gas block to build a power plant in Batam. The electricity from the island could be sold to Singapore," PLN executive Syaiful B. Ibrahim said, adding that the company could also build a coal-fired power plant in Riau, where coal reserves are abundant.
Director General of Electricity and Energy Use J. Purwono told the Post that Indonesia was very supportive of the project it would ensure the country could overcome the current power crisis that has hit regions in Sumatra and Kalimantan. He said in the future it would also help PLN to generate more income from exporting electricity.
To provide reliable supplies of electricity in the region, ASEAN member countries agreed in 1997 to jointly develop the ASEAN Power Grid project. The project envisions countries with abundant natural resources generating income from their surplus power while countries with high power demands met their electricity shortfalls with imports from neighboring ASEAN countries.
ASEAN is pursuing 11 power interconnections under the project, five of which are scheduled to be in operation by 2010.
Syaiful said three projects were still under examination but were targeted to be completed by 2012.
PLN will cooperate with Malaysian companies Sesco and Tenaga Nasional Berhad to build the power electricity lines connecting the two countries. PLN will cooperate with Singapore Power for its connections with Singapore.
ASEAN will need around $100 billion in investment to meet the increasing demand for electricity in the region over the coming years.