Gov?t prepares new regulation for power plants development

Government is drafting a regulation that will require development of new power plants to be auctioned to get the cheapest price.

Yogo Pratomo, Director General of Electricity at the Ministry of energy and mineral resources told reporters that the Governmental Regulation (PP) draft was already at final stage and is due to be issued within the next few months.

Yogo said that under the proposed PP, government would hold tender everytime it feels development of new power plant is necessary. ?Government will invite investors to submit bids through transparent tender. The lowest bidder will get the project,? he said.

Yogo said the PP is expected to be effective starting as early as next year.

Yogo, however, said, there are exceptions in the PP. Site specific power plants such as geothermal power plants, minemouth power plants and hydro power plants would be excluded from tender obligation. Also excluded will be small-capacity power plant below 10 MW.

If enacted, the regulation wills radically changed power plant development by IPP in Indonesia. In the past IPP who wished to develop power plant simply put their proposal to the government. The government would then approve or disapprove the proposal. The system, which was rife with collusion, had caused state electricity firmPLN to collapse as it had to absorb IPP?s high electricity prices.(alex)