RI finds it difficult to get funds for power projects

RI finds it difficult to get funds for power projects

JAKARTA (JP): Business uncertainty and long investment
recovery time make it difficult for Indonesia to obtain funds to
finance privately sponsored power projects, an expert said.

Peter Jezek, an advisor to the Directorate General for
Electricity and Energy Development, said in a seminar here
yesterday that such financing difficulties may result in delays
of the construction of power projects by private companies.

The government is offering private companies the opportunity
to construct four coal-fired steam power generation units in
Paiton, East Java, each with a capacity of 600 megawatts (MW).
Private firms are also expected to be involved in the
establishment of other power projects in areas in Java, Sumatra,
Kalimantan and Sulawesi.

Jezek said the role of the State Electricity Company (PLN) in
providing electricity for social services, besides making
profits, has created uncertainty for private firms entering the
energy business.

The fact that PLN's electricity billing rates and the price
for electricity produced by private firms for PLN must be
determined by government decrees makes it difficult for private
companies to recover their investment within a short period of
time.

R.J. Barton, chairman of PT Austindo Nusantara Jaya,
acknowledged that the setting of electricity tariffs has become a
public concern. Therefore, billing rates are determined by the
government, which sometimes must have discussions with
legislators before making decisions.

He cited the Paiton project as an example. To resolve problems
with the project, the government set the price of electricity to
be produced by the Paiton project at 8.56 U.S. cents per kilowatt
in the first six years, 8.41 cents in the next six years and 5.54
cents in the following 18 years.

The Paiton power project, the first major private power plant
in Indonesia, will be built by consortia of Indonesian, American
and Japanese companies.(yns)