Power projects may continue this year, Dorodjatun says

The Jakarta Post, Jakarta

The government would allow the independent power producers (IPP) to resume, their projects this year, ones which were put on hold in the wake of the economic crisis in 1997, a senior minister said Wednesday.

Coordinating Minister for the Economy Dorodjatun Kuntjoro- Jakti said the resumption of the electricity projects was aimed at preventing a power crisis which was looming over Java island, the center of politics and the economy of the country.

"A power crisis in Java would materialize should the projects be discontinued," Dorodjatun said in a hearing with the House of Representatives's Commission VIII for energy and mineral resources, environment, science and technology as quoted by Antara as saying.

According to Dorodjatun, there are 28 regions outside of Java which have been experiencing rotating power blackouts. Java might go through a similar experience unless the government allows the resumption of the power projects.

In addition, Dorodjatun said that the resumption of electricity projects was urgent to prepare for the coming general election in 2004.

Prior to the crisis, the state electricity company signed power purchase agreements (PPA) with 27 IPPs, which paved the way for the latter to develop power projects in the country.

The government put on hold many of the projects in late 1997 as part of the retrenchment program to cope with the economic crisis.

The postponement was first lauded by many people who considered it a good response to the reform movement, given the fact that all the projects involved former President Soeharto's families and friends who partnered with international firms.

But, the postponement later triggered a string of disputes with the IPPs and arbitration proceedings, resulting in financial losses for the government.

Dorodjatun said the government might give a greater role to private sector firms in delivering electricity.

"In many countries, electricity is managed by state-owned companies or the government. But now, electricity should be in the hands of the private sector," he said.

PLN did not have any money to build its power plants, so, it was better to allow private firms to build the plants, he asserted.

Meanwhile, PLN's president Eddie Wibowo urged on Wednesday the government to approve the company's plan to get an US$800 million loan from European countries for its projects to cope with the power crisis in the 28 regions.

"We expect the Ministry of Finance could immediately approve our proposal," Eddie said after a Cabinet meeting on electricity led by Vice President Hamzah Haz.

He said that PLN has been offered loans by creditors from countries like Denmark and Belgium, but the prospective creditors asked for the government's approval for the loans.