Govt plans to tender new power projects

The Jakarta Post, Jakarta

The government plans to open new tenders for the construction of new power generators in a bid to help meet soaring demand for power and to avoid a power crisis in the future, a senior official says.

"We are still assessing the demand. When it is completed, we will start the tender," Ministry of Energy and Mineral Resources electricity and energy application director general Luluk Sumiarso was quoted by detik.com as saying on Wednesday.

He said that the process should be completed as soon as possible considering the rising power demand in the country.

The demand, particularly in Java and Bali, is creating fears of a looming power crisis, especially as the construction of new power generators by private investors was halted following the 1997 financial crisis.

At the time the government was forced to terminate power purchase contracts with 27 independent power producers (IPPs) to stop state-electricity company PLN, which was supposed to buy the power produced by the private investors, from going bankrupt.

After years of negotiations, the government finally reached agreement with 26 IPPs on new contracts. Some of the IPPs agreed to sell their power at lower prices, while others agreed to sell the projects to PLN.

The 26 IPPs have a combined power generation capacity of 10,615 MW.

Luluk said that the agreement with the 26 IPPs should help improve the investment climate in the country's power sector, which in turn should help the government entice investors for the planned new tender.

Luluk also said the government would invite the private sector to cooperate in the development of power generators acquired from four IPPs.

The four power plants are the Dieng power plant (Central Java), Patuha (West Java), Sarulla (North Sumatra) and Cibuni (West Java).

However, he did not provide details of what form the partnership would take.