Electricity projects

Electricity projects

Regarding the article "Influence brokers inflate prices of
electricity plants," the latest statement by Indonesia's electric
utility, PLN (state electricity company), that it must go ahead
with three controversial power projects (Muara Tawar, Tambak
Lorok II and Grati) is unfortunate, for these projects do not
represent the best way to progress toward greater efficiency and
higher quality of service.

First of all, these projects were conceived under pressure of
a crisis that no longer exists. PLN has excess capacity in the
Java-Bali system since the completion of projects that were
accelerated during the 1990 crisis (Gresik, Muara Karang, Paiton,
Tambak Lorok I and Tanjung Priok).

Today PLN cannot sell all the electricity it is able to
generate because many industrial customers, who were unable to
get PLN connections or who were not satisfied with PLN's quality
of service, decided to install their own generators. To improve
the situation, PLN would do better to invest its scarce resources
to strengthen transmission and distribution, rather than build
new power plants in Java. (PLN has already agreed to this idea,
but only after the three new projects are built).

Second, these projects will impede the process of involving
the private sector in power supply, something to which the
president has been committed since 1990 but which has moved
forward very slowly since then. Private power projects for West
and East Java have been proposed and approved by the government,
and should be allowed to replace the Muara Tawar and Grati PLN
projects. But right now the private projects are on hold because
their potential gas supplies have been committed by Pertamina to
PLN.

Indonesia is on the verge of making substantial changes it its
power sector, changes that can increase efficiency through
competition, reduce dependence on government subsidies, make
optimal use of all available energy resources, slow down
environmental pollution, and stimulate growth of employment and
industry. Given the government's expressed commitment to these
objectives, one must wonder why PLN insists on building the three
projects in question. It is not too late to change course, but
perhaps those "lobbyists and brokers with strong political ties"
who were mentioned in the DPR hearing are still having their day.

LORENZO KRISTOV

Jakarta