PLN sees slow financial closure as hampering 35 GW project

By Thomas Sembiring

Slow progress in reaching financial close for power plant projects whose contractors have signed the power purchase agreement (PPA) with state-owned electricity firm PT PLN is seen as a major obstacle to the government?s 35,000 MW power plant development program.

This was said by Nicke Widyawati, PLN Corporate Planning Director during a business forum on Thursday.

Nicke said that many independent power producers (IPPs) which have signed PPA with PLN have yet to get certainty over funding sources (for their projects as they have yet to get business feasibility guarantee letter from the Ministry of Finance as required by investors to reach the financial close.

?There are many which have signed the PPA, but have yet to reach financial close. There are about 9,300 MW,? she said.

President Joko Widodo expressed disappointment on Tuesday over the slow progress of the 35,000 MW power plant development program, saying as of October 24, only 9.4 percent have reached commercial operation status.

Nicke said that the government?s recent move to alter the formula in determining coal price for mine mouth power plant projects has also hampered IPPs from reaching financial close.

She also said that evaluating the 35,000 MW project should not only be based on how many plants have reached commercial operation status, but also be looked into overall progress such as completion of land acquisition, which she claimed has reached 41 percent.

Elsewhere, PLN is also facing the challenge of lack of skilled human resources to complete the required transmission projects.

Editing by Reiner Simanjuntak