Phase Two 10,000 MW program gets tax incentive

The government will exempt private power producers from import tax as incentive if they participate in the Phase Two 10,000 megawatt power plant crash program.

The Presidential Decree No. 4/2010, issued on Jan. 8, which instructs state power company PT Perusahaan Listrik Negara (PLN) to accelerate the crash program, says the state company can cooperate with the private sector in developing power plants under power purchasing agreement (PPA) scheme.

The decree says the crash program includes development of power transmission network, which will be regulated further by the energy minister.

?Development of power plants and transmissions are entitled to facilities in the forms of import tax exemption and other facilities that will be regulated further by the finance minister,? the decree says.

Under the PPA scheme, PLN is obliged to buy power produced by independent power producers (IPP) and the decree says the government will guarantee that PLN is able to carry out the function.

The decree notes however that investors should prioritize the use of domestic products in the construction of the power plants and transmissions.

The decree requires PLN to submit its accountability report over implementation of the program at the end of the program on Dec. 31, 2014, and periodical report every three months to the coordination team which will be formed by the government. (bernard)