Govt plans to tender new power projects

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.