Indonesia presses on with power plants auctions despite debt concerns

24 October 2017 Week 42

Indonesian state-owned power utility PLN will not postpone this year’s remaining power plant construction auctions, despite recent revelations of the company’s huge debt problems.

The auctions will proceed, but “there will be adjustments to the targets for the auctions,” PLN’s corporate planning director Syofvi Felienty Roekman was quoted by the Jakarta Post as saying last week.However, Syofvi could not say how many or what kind of projects would be offered.“Everything is still within our electricity procurement business plan, but we will review it according to the growth of Indonesia’s energy use,” she said.Jakarta media in September published a letter leaked from the Ministry of Finance that expressed concerns about the US$22.9 billion debt amassed by PLN.Finance Minister Mulyani Indrawati said in the letter that PLN’s debt mountain, which included interest on loans, had exceeded its cash-raising capacity. The Post said PLN had been under pressure to invest in more power plants as part of President Joko Widodo’s target of adding 35,000 MW new capacity to the grid by 2019 – a target the Ministry of Energy has said will not be achieved.Reassurances that planned new project auctions before this year’s end will still take place follow local media reports that PLN had already postponed up to 9,000 MW of development. PLN said a slowing economy meant lower growth in electricity demand. However, large areas of eastern Indonesia’s archipelago are outside the national grid network.A bid by PLN to win government backing to fix thermal coal prices for its plants was rejected earlier this month by Energy Minister Ignasius Jonan as an “outdated” concept.PLN sought to fix coal prices to help it control its generating costs, local reports said. Jonan said he had told PLN to improve its efficiency instead. The bid followed a refusal by the government to increase electricity prices, the Jakarta Globe said.PLN operates or owns over 70% of Indonesia’s 55,000 MW capacity, about 60% of which is fueled by coal. 

Edited by

Richard Lockhart

Editor

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