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)