Govt allows capacity expansion of IPPs

Government said last week that it was endorsing capacity expansion of several independent power producers (IPPs) in Java and may also allow IPPs outside Java to expand capacity.

Director General of Electricity at the Ministry of Energy and Mineral Resources J Purwono said last week that the government, working with state electricity firm PLN, had endorsed capacity expansion of Paiton, Tanjung Jati B and Cilacap power plants by 800MW, 1320MW and 600MW, respectively. All the coal-fired power plants are located in Central and Eastern part of Java.

Purwono said PLN would hold direct negotiation with owners of Tanjung Jati B and Cilacap with condition that the price offered would be lower than present price. Tanjung Jati B, which currently operates 2x660MW power plant, is owned by Sumitomo-controlled PT. Central Java Power, while Cilacap, which currently operates 2x300MW power plants is owned by Chengda Engineering-backed PT.Sumber Segara Primadaya.. He added that for Paiton expansion, PLN would hold beauty contest between three operators that are currently operating in the area: Indonesia Power, Paiton Energy Company and Java Power. ?The lowest bidder will be given the project (expansion), he said.

Purwono said works for Tanjung jati B expansion could start early this year, with completion seen at 2010.

He added that IPPs that are operating oustside Java would also be allowed to expand capacity provided that PLN as offtaker considered that additional electricity produced would be absorbed by market. ?IPPs that are operating Sengkang power plant in South Sulawesi and Palembang Timur in South Sumatra could apply for capacity expansion,? he said.

Government is trying to speed up development of power plants across the country to meet soaring demand as Indonesia?s economy is predicted to grow steadily in the future. (godang)