Govt to buy captive power from private companies

The Jakarta Post, Jakarta

The government is planning to buy captive power from private companies to help the major tackle power shortage problem which has hit Java and Bali during the past few weeks.

"We will invite businessmen who have captive power to talk about the possibility of selling their power to the government," Director General for Electricity and Energy Utilization (LPE) at the Ministry of Energy and Mineral Resources Luluk Sumiarso said on Friday.

Luluk said a meeting with some businesspeople was expected to take place sometime next week.

The items to be discussed include a purchasing arrangement, the process of interconnection with the distribution network of state-owned electricity company PLN, and pricing.

"We will provide attractive pricing to encourage companies to sell their captive power," Luluk said.

The decision to buy captive power from industrial companies came in the wake of an electricity crisis which had hit Java and Bali.

In May, four power plants, namely the Gresik power plant, Gunung Salak, Saguling and Cirata broke down, causing a power supply cut of between 600 and 800 megawatts.

Consequently, several areas in Java and Bali suffered a rotating blackout from 5 p.m. to 10 p.m.

Captive power is a power generation method built by industrial companies to supply their own power demands. Captive power generation plants were built in the 1990s when many companies could not rely on the government for consistent power and often suffered power shortage as their growth outpaced infrastructure development.

Energy analysts have said the government should take advantage of the captive power which has a reserve capacity of 6,800 MW.

Luluk said electricity from captive power was expected to be distributed during peak load times when power supply from PLN could not fully cover demands.

PLN has an installed capacity of 18,675 MW but it can only distribute some 13,695 MW. At peak times, power usage can jump up to 13,250 MW or just below the maximum.

PLN president Eddie Widiono acknowledged that the power company runs a very thin reserve capacity of maximum 10 percent. Whereas to avert disruption, it needs a more than 30 percent reserve capacity.