PLN warns of rotating power cuts

JAKARTA (JP): State electricity company PT PLN warned on Wednesday it would impose rotating power cuts in some parts of the country due to a shortfall in supplies.

PLN's president Kuntoro Mangkusubroto said at a seminar in the North Sumatran capital of Medan that the measure was necessary because the demand for power in many parts of the country was exceeding the company's supply capacity.

"We have to accept the possibility of rotating power cuts because the demand for power has exceeded the generating capacity of the existing power plants," Kuntoro was quoted as saying by Antara news agency during a seminar on electricity and regional autonomy organized by the University of North Sumatra.

He said PLN had identified 29 "critical" areas prone to rotating blackouts.

The company had already instituted power cuts in some of the areas, including South Sumatra and Lampung provinces, Kuntoro explained.

The only solution to the supply shortages was for PLN to replace existing outdated power plants with new ones and to add to its power generating capacity.

The state company was, however, unable to do so due to its current financial constraints, he said.

The lingering disputes between PLN and the independent power producers (IPP) over contracts had damaged the bankability of the state company in the eyes of the world's financial community and made it difficult for it to raise offshore financing for its investments, he said.

PLN had signed power purchase agreements with 27 IPPs, under which it had agreed to pay for power supplies in dollars.

The sharp drop of the rupiah against the dollar, however, has rendered PLN unable to meet its financial obligations to the IPPs and, as such, it is now seeking to renegotiate the contract terms.

Kuntoro also said the low power tariffs set by the government had also made it impossible for PLN to save some of its earnings for investment.

"Today, the national selling price for power averages Rp 279 (2.8 US cents) per kilowatt hour (kwh), compared with the production cost of Rp 400 per kwh," Kuntoro explained.

He said no investor was interested in developing power plants in the country in view of the low power price.

Kuntoro voiced pessimism that the central government would be able to find solutions to the power shortages in the near term. As such, he said, regional administrations should be active in thinking up ways to ensure power supplies in their respective jurisdictions. (jsk)