Govt aims to lure investors with power road show
Fitri Wulandari, The Jakarta Post, Jakarta
The government is planning a road show abroad to woo investors into the country's power sector.
The road show will also promote investment in various power projects, including a number of independent power producer (IPP) projects that had been terminated.
Yogo Pratomo, the newly installed director general of electricity and energy utilities at the Ministry of Energy and Mineral Resources, said the road show would aim at giving information to foreign investors on the improved investment climate in the power sector in Indonesia.
"We will inform them that the macroeconomic condition is stable, the price of electricity has reached a profitable level and the investment climate is conducive," Yogo said on Wednesday.
"Lack of investors is the biggest problem in the power sector," Yogo said.
The road show will be staged in Japan, the United States and Europe with the support of the World Bank, the Asian Development Bank and the Japan Bank for International Cooperation (JBIC).
The agencies have been active in providing financial aid to improve the country's power sector, particularly the World Bank which has been pushing for liberalization of the sector.
Power shortages in the country have been increasingly serious over the past several years, with power demand continuing to grow but supply remaining stagnant due to lack of investment.
State electricity firm PT PLN said it would need some $5 billion in new investment for the period between 2002 and 2006. Over the next 10 years, it will need some $28.5 billion.
Yogo said some independent power producer projects that were terminated last year would be offered during the road show. There are seven private power projects that had been terminated, namely Tanjung Jati A and Tanjung Jati B, Cilacap power plant in Central Java, Kamojang, Serang and Cilegon in West Java and Pasuruan in East Java.
The power plants are part of 26 independent power producers that had a lengthy dispute with the government after their projects were postponed in 1997 due to the economic crisis.
In June last year, the government renegotiated with power producers whose power projects had a combined capacity of 10,615 MW worth $15.1 billion.
Yogo said the government restarted construction of the Cilacap power plant at the end of 2003 and would restart construction of the Cilegon power plant this year. The Cilacap and Cilegon plants will have power capacities of 600 MW and 730 MW respectively.
The government obtained financing from the Bank of China to restart construction of the Cilacap power plant.
Credit export financing has been secured from the JBIC for the Cilegon power plant.
"Hopefully, by restarting the two projects we will be able to convince investors that the investment climate in Indonesia has improved," Yogo said.
Yogo said there would be nine power plant projects in the country either continuing or starting construction this year, including the Cilacap and Cilegon power plants. The other power plants are Labuhan Angin in North Sumatra (115 MW), Tarahan in Lampung (100 MW), Asam-Asam in South Sumatra (2 x 55 MW), coal- fired Batam (55 MW), combined-cycle Batam (30 MW), geothermal Sarulla in North Sumatra (55 MW) and the expansion of Muara Tawar power plant.
Only two projects, that is combined-cycle Batam and the expansion of Muara Tawar, will be completed this year, which will provide an additional 170 MW capacity to the Java-Bali grid. Other projects will be completed between 2006 to 2008.