Bekasi Power?s power plant project opposed by PLN

Private power company PT Bekasi Power, a subsidiary of IDX-listed property developer PT Jababeka Tbk, may not be able to realize a key 2x300 MW coal-fired power plant project in Kendal, Central Java, as state-owned electricity firm PT PLN has declined to sign the required power purchase agreement (PPA), Kontan reported on Wednesday.

The paper quoted Bekasi Power President Director Teguh Setiawan as saying that PLN has declined to sign the PPA because the project is not included in the government?s 35,000 MW power plant projects.

?According to PLN, electricity supply in Java will later be excessive, as such there?s no need for other (power) plants,? he told the paper.

Bekasi Power plans to develop the estimated US$800 million power plant to support the operation of the Kendal Industrial Estate. Construction of the power plant was expected to start next year, in the hope that commercial operation can start in 2019.

Although the electricity will be entirely supplied to the industrial estate, the company will initially sell the electricity to PLN. In addition, with such a huge capacity, the electricity output will not be able to be entirely absorbed by the industries at the estate.

In response, PLN Senior Manager for Public Relations Agung Murdifi said that if a private power company wants its electricity to be purchased by PLN, the power plant project must go through tender process, and that it must be part of the PLN?s electricity procurement business plan (or RUPTL).

Agung said that PLN is ready to supply electricity to any industrial estates including the one developed by Jababeka.

The 2,700-ha Kendal Industrial Estate in Central Java is developed by Jababeka in a joint venture with Sembcorp Singapore. The estate is scheduled to be inaugurated by President Joko Widodo and Prime Minister of Singapore Lee Hsien Loong in August.

Uncertainty over the power plant project will affect the Kendal Industrial Estate. Teguh said that to date no large industry has made firm commitment to invest in the estate, Teguh said.

He explained that an industrial estate needs a reliable and quality supply of electricity to attract investors. He added that investors are hesitant to get power supply from PLN as it is considered unstable.

He expected the government to issue a regulation to facilitate electricity supply transaction between a private firm and PLN. He said that without reliable power supply over the next 10-20 years, industrial estates in the country could not be developed as expected by the government. (*)