Power plant projects to resume: Official

Moch N. Kurniawan, The Jakarta Post, Jakarta

The government is considering allowing up to seven independent power producers (IPPs) to resume the development of power plants which were halted in the wake of the country's 1997 financial crisis.

Director general for electricity and energy utilization Luluk Sumiarso said it was considering the move to help meet the growing power demand both now and in the future.

He declined to name the IPPs or specify where the power plants would be located.

"We can't disclose it until the presidential decree which suspended and reviewed the development of many (infrastructure) projects has been revoked," he told reporters on the sidelines of a hearing session with the House of Representatives commission VIII on science, technology and the environment.

The government allowed 27 IPPs to enter the country's power generation sector under a power purchase agreement (PPA) contract with state-owned electricity company PLN in the early 1990s because PLN was unable to build sufficient generating units to meet the increasing power demand in the country.

But the government suspended and reviewed most of the power projects during the financial crisis in an effort to help ease pressure on the local currency and state finances.

The government had also asked PLN to renegotiate the contracts, seen as unfavorable because of the relatively high price PLN must pay for the power produced by the IPPs.

The suspension of the power projects were made based on the presidential decree No. 39/1997.

The government said last week it planned to revoke the decree to provide legal certainty for investors to continue the power projects.

The plan to continue the projects was also part of government efforts to cope with an imminent power crisis.

The government has repeatedly said Java and Bali islands are predicted to undergo a black out in 2004 and that 28 other areas outside the two islands could run out of power if there are no new power plant developments.

Separately, PLN president Eddie Widiono said that one the IPPs to be allowed to resume the power development project was the Karaha Bodas Co., which owns the Karaha geothermal power project in West Java.