Ministry to issue decree to restart power projects
Friday, June 7 2002 - 11:36 PM WIB
"We hope the decree will be issued this month," ministry spokesman Nurwinakun was quoted as saying by The Jakarta Post.
The government suspended some 21 power projects worth around US$10 billion belonging to the IPPs in the late 1990s as part of efforts to cope with the country's economic crisis.
But the government now wants to see these projects running again, particularly to help avoid a power crisis in the future. The IPPs will sell their power to state-owned electricity company PLN.
The move to allow the resumption of the projects comes as PLN has managed to obtain lower power purchase prices from several IPPs.
The Sarulla geothermal power plant in North Sumatra and the Bedugul geothermal power plant in Bali are among the power projects whose contractors are ready to resume development.
The country still needs additional electricity to cope with the imminent danger of power black outs.
PLN has said that Java and Bali will begin to experience a power crisis in 2006.
However, some 28 areas in other islands are already experiencing the inconvenience of rotating blackouts.
Separately, a senior official of the Indonesian Geothermal Association (API), Riki F.Ibrahim, welcomed the planned ministry decree, saying that investors, particularly in the geothermal power plants, were ready to restart their projects.
But he said that the investors wanted the government to drop a value added tax (VAT) policy imposed on geothermal projects at exploratory stage, saying that the new policy was in contradiction to the initial contracts signed by the IPPs and the government.
Under the original contracts, geothermal projects would only be subject to VAT once it they entered into commercial production.
Riki said that unless the new tax policy was revoked, geothermal-based IPPs would not recommence their projects. (*)