Five power projects to receive government?s guarantee

The government will offer political and financial guarantees for investors willing to build five power projects in Java, Sumatera and Sulawesi under independent power producer (IPP) scheme, Kontan reported on Monday.

Deputy chairman of the National Development Plan, Dedy Supriadi Priatna, said in Jakarta last week that the guarantee would cover three main aspects including a policy risk, performance risk and demand risk.

Under the policy risk, the government, through state-owned electricity company PLN, will buy all investors? assets if the power plants could not be operated due to a change in the government?s policy.

In addition to the policy risk, the government, under the performance risk, will also pay compensation to investors if there is an interruption in their power supply due problems in PLN?s power distribution system, he said.

?While under the demand risk, the government will also pay compensation to investors if the number of their subscribers is lower than the minimum target set under the contracts,? Dedy said.

He said that the five power plants which would receive such an exclusive guarantee are the 3 x 200 MW North Sumatra coal fired-power plant, the Central Java coal-fired power plant; the 200-MW South Sulawesi coal-fired power plant; the 2x55 MW North Sulawesi I coal-fired power plant; and the 55 MW North Sulawesi II coal-fired power plant.

The five power projects have a total capacity of 2,965 MW and need a total investment of up to US$2.96 billion, he said. (*)