Indonesia sets out to bring in line ailing power sector<\/p>\n
TOKYO (Dow Jones): Indonesia's Ministry of Mines and Energy
\naims to restore the domestic power sector's financial viability
\nthrough a restructuring program running through 2003, a senior
\nministry official said on Tuesday.<\/p>\n
Financial problems in the power sector ranked among the most
\nserious difficulties Indonesia has faced since the economic
\ncrisis first hit in mid-1997, said Endro Utomo Notodisuryo,
\ndirector general for Electricity and Energy Development at the
\nministry.<\/p>\n
In August last year, the Indonesian government promulgated a
\npower sector restructuring program, which seeks to introduce
\ncompetition by more efficient participation of independent power
\nproducers.<\/p>\n
IPP projects in Indonesia haven't been based on open tender
\nmechanisms but on direct assignment, and the economic turmoil has
\nbrought mounting IPP concerns about the return on their
\ninvestment, Endro said.<\/p>\n
\"Given the current excess of generation capacity in the Java-
\nBali system, it is extremely difficult for PT Perusahaan Listrik
\nNegara (PLN) to meet the take-or-pay power purchase agreements
\nwith the IPPs,\" he added.<\/p>\n
Currently, the government allows IPPs to generate electricity,
\nbut they are only allowed to supply the power to PLN, a state-run
\npower monopoly.<\/p>\n
Endro said that within Indonesia's energy sector, power sector
\ndemand has been hardest hit, with oversupply likely to be a
\nproblem in the near future.<\/p>\n
If no action is taken, the Java-Bali system will suffer an
\nexcess of generation capacity \"until the year 2006\", Endro
\npredicted.<\/p>\n
\"IPPs' participation here has so far yielded a series of
\ncomplications,\" such as a flow of costly project offers and
\ndevelopments regardless of the government plans, Endro said. \"PLN
\ngets losses and more risks,\" he added.<\/p>\n
In a bid to tackle the hefty losses the domestic power sector
\nis currently facing, the government has been working on
\nfundamental changes to existing laws and codes in conformity with
\ninternational practice, Endro said.<\/p>\n
Under the proposed restructuring program, the government will
\nestablish the Java Bali Power Company in the middle of 1999, to
\nstart allowing direct electricity purchases, initially in the
\nJava-Bali area.<\/p>\n
The Ministry aims to revise the current Electricity Law by the
\nend of 1999, set up an independent regulator in 2000, and
\nestablish a \"multiple buyer, multiple seller\" power market in the
\nJava-Bali area by 2003, Endro noted.<\/p>\n
The restructuring will see PLN unbundled into independent
\nbusiness entities in generation, transmission and distribution,
\nEndro said.<\/p>\n
The government also is in the process of rationalizing
\nelectricity tariffs and establishing a new mechanism for delivery
\nsubsidies to underdeveloped regions, he said.<\/p>\n
Endro was speaking at an annual symposium on Pacific Energy
\nCooperation being held in Tokyo Feb. 16-17.<\/p>",
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