Kadin urges government to drop new renewables tariff policy

Petromindo|Boim

The Indonesian Chamber of Commerce and Industry (Kadin), a powerful business lobby, has demanded the government to drop the new policy on the selling price of electricity from renewables-based power plants, saying it has undermined investment climate in the renewables sector, Bisnis Indonesia reported on Thursday.

The paper quoted Kadin Chairman Rosan P. Roeslani as saying that the recently-introduced Minister of Energy and Mineral Resources Regulation No 12/2017, which limits the selling price of electricity from renewables at 85 percent of the so-called electricity supply cost (or BPP) of state-owned electricity firm PT PLN in the region where the project is located, will discourage investors from entering the renewables sector as the new policy sets a lower price of the electricity to be sold to PLN.

He said that Kadin has sent a letter to President Joko Widodo to revise the new ministerial regulation. He added that Kadin as received suggestions from the renewables industry players for the government to return the previous feed-in tariff mechanism in deciding for the selling price of electricity from renewables-based power plants.

Rosan said that with a favorable policy, the country stands to benefit from investment potential of around US$4 billion to develop a combined 4,000 MW of renewables power plants.

He acknowledged that while the new policy would help bring down the electricity selling price of PLN to consumers, the development of renewables-based power plants will also in turn reduce government subsidy in the electricity sector as renewables can replace electricity supplied from diesel-fired power plants in the outlying regions of the country. Diesel fuel is seen as more expensive than renewables such as biomass, Rosan said. (*)