Govt prepares new rules on investment in power sector<\/p>\n
Fitri Wulandari, The Jakarta Post, Jakarta<\/p>\n
The government is drafting a regulation for investment in the
\ncountry's power sector to ensure that future power projects are
\nin line with the national electricity plan.<\/p>\n
\"Power projects in the future should be in line with a supply-
\ndemand balance and financial capability,\" Director General of
\nElectricity and Energy Utilization Yogo Pratomo said at a
\ndiscussion on power investment on Friday.<\/p>\n
Yogo explained that state-owned power firm PT Perusahaan
\nListrik Negara (PLN)) would draw up a list of power projects in
\nits power supply plan, which would be based on the government's
\n2004 to 2013 National Electricity Plan.<\/p>\n
\"PLN will then choose which projects will be handled by them,
\nbased on their financing capability and which projects are to be
\noffered to investors through competitive bidding,\" Yogo said.<\/p>\n
The regulation on private power projects aims to prevent past
\nfailures with independent power producers (IPPs). Before the late
\n1990s regional economic crisis, the government allowed private
\ninvestors to build their own power plants and to sell power to
\nPLN. This was made without clear planning, in terms of both
\ndemand-supply aspects and financing capacity.<\/p>\n
There were 27 IPPs that obtained licenses to build power
\nplants. But the projects were allegedly marred by collusion,
\nwithout a transparent bidding process, forcing PLN to pay a high
\nprice for the power.<\/p>\n
Following the crisis, the government was forced to delay the
\nprojects, leaving it in lengthy disputes and negotiations with
\nthe IPPs.<\/p>\n
Last year, the government managed to renegotiate the power
\nprice with 26 IPPs. However, it lost a legal battle with U.S.-
\nbased power firm Karaha Bodas Company (KBC) last February and has
\nto pay US$290 million in compensation.<\/p>\n
\"These projects (the IPPs), were not in the government's plan.
\nThus it was not clear who established them,\" Yogo said.<\/p>\n
Based on the National Electricity Plan, Indonesia needs an
\nadditional power capacity of 23,443 megawatts (MW) to boost the
\ncapacity of existing power plants to 54,528 MW by 2013. It needs
\nan investment of US$23.4 billion, and another $7 billion to $8
\nbillion for the construction of transmission and distribution
\nfacilities.<\/p>\n
The plan is based on a number of assumptions, including
\naverage annual economic growth of 4 percent to 5 percent, and
\npopulation growth of 0.9 percent.<\/p>\n
Yogo added that in the future the government would not provide
\na government guarantee for the investors. Any commercial risks
\nwould be born by the investors.<\/p>\n
\"The government would not be involved in the business-to-
\nbusiness negotiation,\" Yogo said.<\/p>\n
He said this was aimed at preventing the government from being
\ninvolved in a commercial dispute and ending up paying huge
\nclaims.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-prepares-new-rules-on-investment-in-power-sector-1447893297",
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"sponsor": "Okusi Associates",
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