PLN to tighten requirement for independent power producers

State-owned electricity company PT Perusahaan Listrik Negara (PLN) said that it would tighten the financial requirement for independent power producers planning to build private power plants in the country so as to prevent a possible delay in the construction works, Kompas reported on Tuesday.

PLN?s president director Fahmi Mochtar said in Jakarta on Monday that at present independent power producers (IPPs) were given a year after the signing of a power purchase agreement (PPA) to obtain the funding for the projects.

?But, in a reality, many of the IPPs needed more than a year to secure the funding. Many of them have even failed to realize their projects due to financial problem,? he said.

As the consequence, he said, many of power plants built by IPPs could not be operated according to schedule, Fahmi said. ?This put PLN in a difficult situation because the construction of such power plants mostly located in quite potential areas could not be offered to other parties,? he said.

In order to eliminate such problems, PLN is currently drafting a new regulation which would require IPPs to provide financial guarantee to be able to take part in the construction of private power plants, Fahmi said, adding that the guarantee would account for between 2.5 and 5 percent of the total value of the projects.

At present IPPs contribute about 20.9 percent of the country?s total power supply which reaches about 29,000 megawatt. There are as many as 123 private power plants to be built in the country as of October, this year. 62 of them have signed their PPAs with PLN, 10 others in the process of securing the PPAs, 19 in the evaluation process by PLN, and the remaining 32 in the auction process. The projects are expected to provide additional power supply of about 25,400 megawatt.

As many as 16 of the 62 private power plants which have signed the PPAs have began operation with a total capacity of 4,194 megawatt. (*)