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Indonesia to relaunch power projects NEW YORK (US) - The Indonesian government is to relaunch Wednesday the development of 26 power projects that were halted in late 1997 by an economic and monetary crisis, senior government officials said Monday, the Kyodo News Service reported. A dispute with Karaha Bodas Co. of the United States still needs to be settled, but renegotiations with most independent power producers are already complete.
Luluk Sumiarso, director general of electricity and energy utilization of the Ministry of Energy and Mineral Resources, told a press conference completion of renegotiations is a "starting point" for the country to continue developing its power infrastructure. "The completion will also give a positive sign for investors in efforts to revive a conducive investment climate in Indonesia as we have shown our goodwill in respecting the contracts," Luluk said.
President Megawati Sukarnoputri is to relaunch the project at the Tanjung Jati B Power Plant in the Central Java town Jepara on Wednesday. The $41.6 billion Tanjung Jati B project itself, which has a power-producing capacity of 1,320 megawatts, will be financed mostly by Japanese loans. Sumitomo Corp. (J.SUT) is to provide $550 million, while the remaining funds will come from the Japan Bank for International Cooperation and a consortium of Japanese financial institutions.
The completion of renegotiations has raised hope there will be no power crisis in the country in the future. A power crisis looms now amid limited supply and rising demand. The State Electricity Co. (PLN) has installed capacity of around 21,000 megawatts nationwide with some 18,000 MW for the densely populated islands Java and Bali. In reality, however, PLN can only provide 12,000 MW to 14,000 MW in Bali and Java, while the peak load on the islands can reach more than 13,000 MW.
The government put on hold many projects in late 1997 as part of a retrenchment program to cope with the economic crisis. PLN, which was financially troubled by the crisis, asked to renegotiate power purchase agreements, especially on price. Following the postponement of the projects, some independent power producers decided to file arbitration proceedings against PLN, the state-run oil company Pertamina and the government, while others renegotiated the contracts.
But the problems of 27 independent power producers, mostly foreign companies, have made foreign investors reluctant to invest in the power sector. "But now, we are relieved that finally we could reach an amicable solution through a commercial approach, while at the same time, we can bring power at a price affordable to households, which make up the majority of our customers," PLN President Eddie Widiono told reporters.
Of the 26 independent power producers, 14 agreed to continue their projects with a combined power generation capacity of 10,615 MW under a new pricing scheme. The government and PLN each agreed to take over two projects, while Pertamina took over one. Meanwhile, seven others agreed to terminate the purchase agreements and the government is to offer them to new investors. "But we will give the first opportunity in an open tender to old investors if they want to reenter the projects," Eddie said.



Posted in Power supply @ 09 July 2003 00:02 CET by Jeroen · 'Blog' RSS feed · permalink






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