Govt prepares incentives for 35,000 MW power projects

The government is preparing a number of incentives to help speed up the development of the targeted 35,000 power plant projects over the next five years.

Director General of Electricity Jarman was quoted by Bisnis Indonesia as saying Friday that a presidential decree is being drafted to allow state-owned electricity firm to directly seek foreign loans (direct lending mechanism), to be guaranteed by the government, to finance the power plant projects.

Under the existing regulation, the government is banned from providing guarantee on foreign loans sought directly by state-owned enterprises (SOEs). The regulation stipulates that the government must get the foreign loans to be later disbursed to the SOEs.

The government is planning to develop a total of 35,000 MW power plants until 2019, of which about 15,000 MW to be developed by PLN, and the other 20,000 MW by independent power producers (IPPs).

Meanwhile, Kontan quoted PLN Director Murtaqi Syamsuddin as saying Friday that the government would also issue a business feasibility guarantee letter for the IPPs to allow them obtain loans with softer terms.

As previously reported, the government will also allow PLN to directly appoint contractors for the power plant projects, instead through tender mechanism, to help speed up the development of the projects.

Kontan said that as of Thursday five companies have submitted proposals to develop coal-fired power plants with a combined capacity of 11,240 MW.

The IPPs included PT Central Java Power (to develop 2x1,000 MW Tanjung Jati B unit 5 and 6 plants), PT Sumber Segara Primadaya (1,000 MW Cilacap coal-fired plant), PT Paiton Energy (2x1,000 MW Banten coal-fired plant), PT Bukit Asam Tbk (2x620 MW South Sumatra 8 mine-mouth power plant), and PT Jawa Energi (5,000 MW Cilacap coal-fired plant). (*)