Govt says IPP power projects face financing problems

Construction and operation of 50 small and medium power plants operated by independent power producers (IPP) have slowed down due to financing problems and increasing costs, an official said Monday.

The power plants have a total capacity of about 500 megawatts (MW) and all of them are located outside Java, J. Purwono, Director Gneral for Electricity and Energy Utilization at the Energy and Mineral Resources Ministry said.

?Some of the projects had to be stopped because of problems in financing and the increasing cost of materials and EPC [Engineering procurement and construction],? Purwono said.

Included in the power plants are the 2x50 MW Embalut power plant in East Kalimantan; the 2 x 10 MW Palu power plant in Central Sulawesi; the 2 x 110 Sarulla power plant in North Sumatra; and the 2x10 MW Bangka power plant in Bangka Belitung.

?Some of the power plants were supposed to start operation in the middle of this year.

?The Embalut and Palu power plants have been in operation, but now they have problems as they must cover high coal prices

He added that, to help deal with the problems, the government would facilitate a renegotiation between state utility company PT Perusahaan Listrik Negara (PLN), the sole buyer and distributor of electricity and the 50 IPPs.

?The electricity prices and other term and conditions, such as the operation schedule, will be renegotiated," Purwono said. ?The renegotiation is important because the projects are also state assets.

PLN's Director of Planning and Technology Bambang Praptono said PLN would let a task force, comprising officials from the Coordinating Minister of the Economy, State finance and development survelliance committee BPKP, Office of State Minister of State Enterprises and PLN, to renegotiate the price.

"PLN would accep any decisions by the task force," he said. (bernard)