PLN tightens selection of power plant developer

State-owned electricity company PLN reiterates its determination to tighten requirements in the selection of developers of power plant projects in the country.

PLN Spokesman I Made Suprateka was quoted by Koran Tempo as saying Monday that the move is made following audit by the Supreme Audit Agency (BPK) on power plant projects under the fast track programs (FTP1 and FTP2) initiated by the previous government in 2006, of which many had been stalled.

He said that according to internal PLN evaluation, many of the projects were stalled particularly due to financial problems faced by the developers.

Suprateka said that PLN has now added additional requirements for developers participating in power plant development projects, one of which is completing due diligence process, both technical and commercial. In addition, developers participating in power plant projects will be required to deposit guarantee fund at least 10 percent of the total value of the project as proof of their capacity in developing the project.

PLN President Director Sofyan Basir acknowledged some developers have protested the guarantee fund requirement, calling on PLN to revise down the size of the fund, but insisted that PLN is determined to maintain the policy. ?The 10 percent guarantee fund requirement is relevant,? he said last week.

The Ministry of Energy and Mineral Resources has also issued new Ministerial Regulation No 10/2017 applying a delivery or pay principle for developers participating in power plant development projects in the country. If developers fail to meet the required capacity and plant quality and completion schedule, they will have to pay penalty. (*)