Govt promises open tenders for electricity

Govt promises open tenders for electricity

JAKARTA (JP): The government plans to make the electricity
business more competitive by holding open tenders for private
power generators.

The Ministry of Mines and Energy's director general of
electricity and new energy development, Zuhal, said Wednesday:
"We still need private investors to generate power because the
state electricity firm PLN has not enough funds to meet demand.
But we'll select them through an open tender."

The government would review the current system of solicited
and unsolicited projects, he told a hearing of House Commission
VI for industry, mining, manpower and investment.

PLN offers solicited projects to private investors through an
open tender, while unsolicited projects are proposed by private
investors with government licenses and granted without
competitive bids.

"In the future, private investors will only get contract
licenses through the solicited system. We'll limit unsolicited
projects to special cases," he said.

He was commenting on House members' concerns that the
government had not been able to control the private sector's
participation in power plant development.

Iskandar Mandji of the Golkar faction said the country had too
much electricity, and the government should control the
generation capacity of private investors or PLN would be
overloaded with idle power.

"We now have a generation capacity of 21,200 Megawatts (MW),
while demand is only 19.800 MW. As a result we see an oversupply
of 1,400 MW. This is not to mention the additional supply from
power plants under construction," he said.

Zuhal said Indonesia should have an electricity reserve of
about 30 percent of demand: "We cannot afford to have a small
margin between supply and demand. We must have a reserve of about
30 percent."

House members said a 30 percent reserve was too much.

"If I'm not mistaken a 10 percent reserve is enough," Iskandar
said.

Zuhal said 21 private contractors were building 21 power
plants in Java, Bali, Sumatra and Sulawesi with a total capacity
of 7,000 MW. Most of the plants will open in 1998 or 1999.

He said the government had offered the private sector
opportunities to build power plants with total generation
capacity of 45,000 MW over the next five years.

To prevent oversupply, Zuhal said, the government would step
up its electricity marketing nationwide, expand its transmission
networks and reschedule some of its projects offered to private
investors.

The House members questioned electricity prices. They said the
prices to be charged by several private generators were too high.

Iskandar cited an example of the price charged by Tanjung Jati
B in Central Java. "The price of 6.45 U.S. cents per kilowatt
hour is too expensive. Why can Tanjung Jati A sell it for 5.7
U.S. cents," he said.

"If we can make it cheaper for our people why do we not do so.
We should side with our people rather than the private
investors," he said. (bnt)