PLN faces difficulties in meeting growing power demand

Indonesia faces the risk of electricity crisis in 2018 if existing power plant projects fail to be completed on schedule, warned President Direct of state-owned electricity firm PT. PLN Nur Pamudji.

Investor Daily quoted Pamudji as saying that while power supply in the most populated island of Java currently remains in excess of 8 GW as existing capacity stands at 31,000 MW, while peak demand reaches 28,000 MW.

But he quickly added that the surplus will be quickly used up amid existing demand growth of 7 percent per year, and if there is no new supply, power crisis will likely occur in 2018.

He said that PLN has set a target to produce about 4,000 MW of additional power supply each year for the next 10 years to meet the growing demand and avoid power deficit, which will require annual investment of about US$12 billion.

Pamudji, however, said that PLN?s internal funding capacity is only about $5 billion per year, which means that without government?s support, it would be impossible for PLN to meet the investment target.

Meanwhile, he said, PLN?s ability to seek new borrowing has been undermined due to the company?s business model, which is saddled with huge subsidy burden.

Elsewhere, Pamudji said that there are a number of key power plant projects to help avoid power crisis in Indonesia in 2018 particularly in Java namely the 2,000 MW Batang coal-fired power plant project in Central Java, the 1,000 MW Indramayu coal-fired power plant expansion project, and the 3,000 MW coal-fired power plant project in South Sumatra.

He said that power plant projects have been hampered by various obstacles including land acquisition and protracted process in obtaining permits from local administration. (*)