PLN to maintain 10% deposit requirement in power plant tender

President Director of state-owned electricity firm PT PLN, Sofyan Basir said that the company will maintain the current requirement for bidders participating in power plant tenders to put a deposit of at least 10 percent of the estimated investment requirement.

Kontan quoted Sofyan as saying Wednesday that the winning bidder will not be able to get back the deposit if they fail to develop the power plant project as targeted.

He said that the 10 percent deposit requirement will help accelerate the development of power plants in the country. He pointed out that in the past, under the so-called 10,000 MW fast track program, the deposit requirement was only set a 1 percent, where many bidders winning the projects failed to perform properly after signing power purchase agreements (PPAs) with PLN. He said that many of the winning bidders were instead selling their contracts to other investors.

PLN Director Supangkat Iwan Santoso said previously that the company was considering to ease the deposit requirement to accommodate the demand of local investors.

Sofyan, however, said that the 10 percent deposit requirement will not discourage local investors in participating in the power plant projects as they normally team up in a consortium with foreign investors.

He added that as evidence that the 10 percent deposit requirement is not a problem to local investors, PLN as of end of last year had signed new PPAs with IPPs for power plant projects totaling 17,000 MW, out of the government?s target to develop a total of 35,000 MW power plants in five years until 2019.(*)