PLN 35,000MW program

Following President Joko Widodo's announcement to add 35,000MW of new generation capacity during his 5-year term in office, PLN recently published its plan for the development of this 35,000MW power project initiative - around 25,000MW will be developed with private developers' cooperation through the Independent Power Producers (IPPs) scheme, and the remainder will be developed by PLN. These projects are estimated to require aggregate investments of more than IDR1,100 trillion (around USD110 billion), and are also incorporated into PLN's 2015-2024 Power Supply Business Plan.

No details have been offered yet on whether the Government will provide any government guarantees for these projects, and if so, in what form (e.g., a business viability guarantee letter issued by the Ministry of Finance (MOF) for Second Fast Track Program Projects). In this connection, it is noted that a number of projects listed in this new plan (e.g., the Hasang 40MW hydro power project, the 2,000MW Jawa-5 coal-fired power project, and the Sumsel 9 and 10 mine-mouth projects) are already slated to be covered by either the MOF business viability guarantee letter or the joint guarantee scheme from the MOF and the Indonesia Infrastructure Guarantee Fund prior to the issuance of this 35,000MW plan.

In a welcome move by PLN, the plan lists the proposed projects and the relevant method of procurement applying to each of them. The procurement process for some of the projects is ongoing (namely, 21 IPP projects and 8 PLN-owned projects); but many others - which mainly consist of hydro, coal-fired and gas-fired power plants - will be announced in the future and procured by PLN either through open tenders (37 IPP projects and 27 PLN-owned projects) or direct appointment (16 IPP projects), as prescribed by the plan. There is no specific schedule issued yet on the procurement announcement of these projects. Interested bidders can monitor PLN's website www.pln.co.id for announcements.

For further information please contact

Luke Devine
Foreign Legal Consultant
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Kirana D. Sastrawijaya
Senior Associate
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kirana.d.sastrawijaya@bakernet.com

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