Plugging electricity to private sector
JAKARTA (JP): The government has recognized the need to quickly increase electricity capacity systematically to ensure continued economic growth into the next century.
Minister of Mines and Energy Ida Bagus Sudjana recently announced the government will continue to invite private participation in power generation by offering attractive incentives.
"With the private participation, we expect that the increasing demand for electricity will soon be met," Sudjana said earlier this month.
He said the government will establish new power plants with a total capacity of 9,500 megawatts (MW) under state-owned electricity firm PT Perusahaan Listrik Negara (PLN). Other power stations, with a combined capacity of 3,000 MW, will be built by private sector companies by March 1999.
The government also plans to construct about 10,000 kilometers of transmission lines and 300,000 kilometers of distribution lines in the same period.
Hong Kong-based Peregrine Brokerage Ltd. noted in its report on Indonesia's infrastructure that private sector generation will increase rapidly given PLN's inability to meet the increased demand.
PLN, which until 1991 had a monopoly on both electricity generation and distribution, plans to raise its generating capacity from 13,129 MW to around 39,000 MW by 2004.
PLN estimates it will cost US$60 billion to bring the generation capacity up to 39,000 MW.
To generate the funds to finance its expansions, PLN restructured last year and formed two subsidiaries -- PT PLN Pembangkitan Tenaga Listrik Jawa Bali I and PT PLN Pembangkitan Tenaga Listrik Jawa Bali II. Both are expected to float shares on local and foreign stock markets as early as the first half of next year.
Peregrine projected that power plants with a total generation capacity of 27,300 MW will be needed to meet the peak load demand for electricity in 2003. Plans favor boosting PLN's capacity by 16,751 MW by 2004 and bringing 8,805 MW of private-sector capacity on stream.
Lagging
Peregrine noted that expansion of transmission and distribution networks has lagged behind generation capacity, significantly contributing to frequent blackouts.
"Demand growth will clearly continue to suffer unless adequate supporting infrastructure is developed. Reports state Indonesia has more frequent outages than some of its regional neighbors because of poor transmission and distribution facilities," Peregrine said in its report.
According to the Central Bureau of Statistics 1993 report, average service interruptions were put at 12.3 per customer a year in Jakarta and 14.3 across Indonesia. Regional peers had interruption rates near 10.
The statistical report also indicated that 88 percent of urban households were supplied by PLN, while only 34 percent of rural households were PLN customers.
Of the total current capacity of 13,129 MW, about two thirds is contained within the Java and Bali interconnected grid. Outside this grid, PLN operates 650 small diesel or oil generators.
Peregrine said the shortcomings of the PLN grid, particularly its inability to supply the country's expanding industrial base, has prompted a surge in the captive generating capability.
Captive generating capability, which is installed by users, is believed to account for 8,800 MW, or 40 percent of the total installed generating capacity in Indonesia.
The bulk of the captive supply was installed in the 1980s when demand for electricity surged, particularly in the industrial sector.
Sudjana noted that to meet the growing electricity demand, the government prioritizes the use of new and renewable energy resources, including hydroelectric and geothermal power.
"New and renewable energy resources in Indonesia have not been able to be developed commercially yet and thus they are still classified as pilot projects. We hope to develop these resources on a commercial basis in the near future," Sudjana said.
He said geothermal potency could reach 19,000 MW, but only 310 MW has been developed.
"However, there has been an increase in activities to explore geothermal resources for electricity," he said.
Peregrine noted that geothermal resources remain the least tapped source by PLN and the private sector. It further noted that the pricing of geothermal energy might be a problem in regards to stimulating private-sector interests.
New incentives
To attract private participation in geothermal energy, Sudjana said the government will soon offer a new package of incentives to private investors.
"We are at the final process of deregulating the geothermal activities," Sudjana said, without elaborating.
He added that the state oil firm Pertamina plans to develop geothermal power generation in Bali in a joint venture with Bali Energy. The venture will set up eight plants with a collective capacity of 400 MW.
In addition to geothermal energy, Sudjana said Indonesia is also seeking ways to increase utilization of hydroelectric power resources, which have a total potential capacity of 75,000 MW.
Despite the huge potential capacity of the hydro-power resources, there was only 2,215 MW on the PLN grid last year, representing 17 percent of its total capacity.
A consortium, comprised of PLN, state-owned general mining firm PT Aneka Tambang and PT Iroda, plans to establish a 96 MW hydro-power plant in Pomala, South Sulawesi, to supply Aneka Tambang's nickel mine.
Plans favor boosting hydro-power capacity by around 900 MW by March 1999.
The government is also pursuing coal-fired electricity generation. Indonesia has an estimated 32 billion tons of untapped coal reserves.
Annual coal production was estimated at 25 million tons last year, but is expected to increase to over 70 million tons by 2000.
PLN currently operates coal-fired power plants in Bukit Asam, South Sumatra, and in Suralaya, West Java. The latter has an installed capacity of 1,600 MW, which will be increased by another 1,800 MW.
PLN has also approved three coal-fired power plants in East and Central Java, controlled by three major independent power producers. Each will have a capacity of around 1,300 MW.
The Paiton I project in East Java, the first independent power producer established, is 32.5 percent owned by Mission, 20 percent by General Electric -- both of the United States -- 32.5 percent by Mitsui of Japan and 15 percent by Batu Hitam Perkasa of Indonesia, which is controlled by Hashim Djojohadikusumo.
The Paiton II project, established last year, is 50 percent by Siemens AG of Germany, 35 percent by PowerGen Plc. of Britain and 15 percent by businessman Bambang Trihatmodjo.
The third project, in Central Java, is controlled by Hong Kong-based CEPA, a subsidiary of Hopewell Holdings.
In addition to the three major projects, PLN also awarded a 400 MW coal-fired power project in West Java to the consortium of Ansaldo of Italy, North Resources Group of the United States and PT Asiani Tujuh Dua of Indonesia, which is controlled by timber baron Mohammad (Bob) Hasan.
On Monday, PLN clinched a power-purchase agreement with a consortium of the Risjadson Group of companies for the construction of coal-fired power units in Sibolga, North Sumatra, and Amurang, North Sulawesi. They will have a combined capacity of 310 MW.
Gas
In addition to the coal surplus, Indonesia also has an estimated 101 trillion cubic feet of proven and probable natural gas reserves and another 126 trillion cubit feet of possible reserves.
PLN's combined-cycle gas generation capacity stood at 2,817 MW last year, or 21 percent of its total grid. Plans favor the addition of 3,344 MW by March 1999 and another 400 MW by March 2004.
PLN has approved a 500 MW gas-fired plant in Grati, East Java, which is controlled by Enron Corp. of the United States and PT Java Energy Power, a company controlled by Ibrahim Risjad.
PLN, which once depended on oil-fired generation, stopped concentrating on this source in the early 1980s.
At the end of the first long-term development period in 1994, oil-fired generation capacity accounted for 49 percent of PLN's total grid. Plans favor bringing 466 MW of capacity on stream by March 1999. There will be no additional capacity increases until March 2004.
This means that PLN's oil-fired share of the total will drop to 11 percent by 1999 and 9 percent by 2004. If the private- sector generating capacity is included, which is mostly coal- fired, this share becomes even smaller.
The government is considering nuclear-power to supplement growing demand.
The government has established the Atomic Energy Agency to conduct a feasibility study for the establishment of a nuclear power plant on Mt. Muria in Central Java. The status of the study and the likelihood of the project proceeding remain unclear. (rid)