Half of 35,000 MW program postponed to 2025

Minister of Energy and Mineral Resources Ignasius Jonan said on Thursday that around 17,000 MW of power plant projects under the government?s 35,000 MW program are targeted to be completed and start operation by 2019.

He said that completion of the other half will be delayed beyond the initial target of 2019, but must be completed by 2025 at the latest. ?The remaining half hopefully can be completed (and reach commercial operation status) in 2023, 2024, or 2025,? he said at a press conference as quoted by a ministry statement.

Jonan explained that the delay in the completion of some of the projects is mainly attributed to lower than projected economic growth in the country. He pointed out that when the 35,000 MW program was planned, it was based on economic growth assumption of 7-8 percent per year, but growth currently hovers at only around 5 percent, which affects electricity demand.

The government in 2014 launched the 35,000 MW power plant development program targeted for completion by 2019. Around 10,000 MW will be developed by state-owned electricity firm PT PLN, while another 25,000 MW by independent power producers (IPPs).

Jonan?s remarks come following earlier warning expressed the Ministry of Finance of PLN?s shaky financial condition as it will have to repay increasing amount of maturing debts in the coming years as the utility firm has been relying on loans to finance various projects. The ministry has advised PLN to reschedule some of its projects including those under the 35,000 MW program, bolster efficiency, and seeks for lower price of primary energy to help cope with the rising debt burden as the government has decided not to increase PLNs? tariff of electricity for consumers.

Jonan reiterated that the 35,000 MW program will be continued despite the warning from the Ministry of Finance, saying that PLN?s financial condition remains solid, to increase electrification ratio in the country.

He said that as per September of this year, electrification ratio has reached 93.08 percent, higher than the government?s target of 92.7 percent. The government has set a target for electrification ratio to reach 97 percent by 2019.

As per September, total capacity of power plants operating in the country stood at 60,000 MW.

Meanwhile, regarding the progress of the 35,000 MW program, 773 MW of power plants (including 168 MW developed by PLN) have been in operation (COD status). A total of 15,266 MW have reached construction stage (including 5,205 MW by PLN), and another 10,255 MW have reached power purchase agreement (PPA) between PLN and IPPs. Another 4,563 MW are still in procurement process, and 6,970 MW still at the planning stage, the ministry statement said.

Editing by Reiner Simanjuntak