PLN warns of rotating power cuts

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replace existing outdated power plants with new ones and to add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)