WB warns of looming power crisis
WB warns of looming power crisis
A'an Suryana, The Jakarta Post, Jakarta
Indonesia is likely to experience a power crisis in 2004 unless
new power investments are brought in, the World Bank has warned.
The World Bank said in its latest economic assessment report
on Indonesia that a power shortage was a clear and present danger
for the country.
The report, revealed to the media last week, is to be
presented at the Consultative Group on Indonesia (CGI) donors
meeting this week in Bali.
The bank said a power crisis could be avoided if the financial
condition of state electricity company PT PLN was improved, to
allow new investments in the power sector.
PLN's finances have deteriorated since 1997 when the regional
economical crisis first hit the country, with accumulated losses
amounting to Rp 45 trillion (US$5.05 billion), it said.
The bank said the decision to increase electricity rates every
quarter, introduced two years ago, was an appropriate move to
help restore the financial soundness of PLN.
PLN has raised electricity rates by an average of 6 percent
every three months since 2001 so that by 2005 it could reach the
commercial rate level of 7 U.S. cents per kilowatt-hour (kWh) in
2005. The current rate is around 5.24 cents per kWh after PLN
raised its rates earlier this month.
But many people objected to the recent hike, which coincided
with an increase in fuel prices and telephone charges, forcing
the government to review the move and indicating that the
government might delay the hike.
The World Bank also said PLN should carry out financial
restructuring and efficiency measures as part of efforts to
restore the ailing company.
PLN needs around $28.5 billion in new investments up to 2010
to develop power generation, transmission and distribution
facilities.
The World Bank said that without the investments, PLN could
not meet the fast rising demand for electricity, thus creating a
power shortage.
The bank estimated that the available power capacity in
Indonesia has been and will be flat from 2001 to 2004 at the
approximate level of 18,700 megawatts (MW) due to the absence of
new electricity investments since 1997.
But the supply figure will be outnumbered by rising demand,
which is projected to jump sharply from 16,400 MW in 2001 to
around 18,000 MW in 2004.
The bank said that although existing power capacity in the
Java-Bali network system, which accounts for over 75 percent of
PLN's generating capacity, was still larger that the demand
during peak hours, the actual amount of power distributed to
customers was barely adequate.
"It happens due to the loss of electricity power for the
transmission networks, regular maintenance and electricity power
reserves which are needed to ensure the operation of the
electricity system," it said.
Elsewhere, the bank said that some 20 outer island power
systems were already showing signs of strains during peak hours,
and posed a great challenge for PLN.
"PLN has been forced to restrict its power generating unit
use, when the generating units are taken out for maintenance or
suffer unscheduled outages," the bank said.