Coordinating minister revises 35,000 MW target to 16,167 MW

By Godang Sitompul

Coordinating Minister of Maritime Affairs Rizal Ramli has revised down the 35,000 MW power project program to 16,167 MW, saying the new target is more realistic.

Rizal, who one day after his installment as the new coordinating minister of maritime affairs criticizing the 35,000 MW program as unrealistic, said only 16,167 MW new capacities are feasible to be developed through 2019.

Under the initial program, President Joko Widodo and Vice President Jusuf Kalla want a total of 35,000 MW new capacities to be developed through 2019.

If the government pushes for the development of 35,000 MW through 2019, state owned electricity firm PT Perusahaan Listrik Negara (PLN) as the sole buyer of power in the country will get bankrupt because it will have to buy a huge volume of power produced from the Independent Power Producer (IPP) power producers, despite being unable to sell it due to oversupply.

He said if there are 35,000 MW new capacities coming onstream by 2019, there will be a power glut amounting to 21,331 MW starting that year. The Power Purchasing Agreement (PPA) signed by PLN with IPPs contains the so-called Take or Pay clause which obliges PLN to pay for the power produced by IPPs whether or not it is going to take it.

?I and my team has made a study. The conclusion is the (35,000 MW) program is not realistic. If (the government) insists on the program, it will imperil PLN?s financial condition. It will bankrupt the firm,? he said.

He said the 35,000 MW program can be ideally completed within 10 years, rather than five years.

Rizal?s office acts as a coordinator for several ministries, including the Ministry of Energy and Mineral Resources which has been tasked by the president and vice president to implement the 35,000 MW program.

Minister of Energy and Mineral Resources, Sudirman Said, however, stressed on Monday that the government would not revise the 35,000 MW power project program, saying that the country needs to increase its electrification ratio as millions of people in thousands of villages still don?t have access to electricity.

?The government will not revise the 35,000 MW target because our electrification ratio is still low,? he said separately on Monday.

The electrification ratio in Indonesia, the largest economy in Southeast Asia, remains low at 86.39 percent compared to other Southeast Asian countries such as Singapore (100%), Thailand (99.3%), Brunei (99.7%), and Vietnam (98%).

Director General of Electricity Jarman said the government aims to boost the ratio to more than 97 percent over the next five years via the development of 35,000 MW power plants outside the 7,400 MW currently under construction phase.

Editing by Reiner Simanjuntak