Pricing uncertainty may affect PLN?s Phase Two fast track program

Uncertainties related to pricing may affect the tender of new power plant projects to be built under state-owned electricity company PT Perusahaan Listrik Negara's (PLN) Phase Two 10,000 MW fast track program.

Sugiarto Harsoprayitno, the director for geothermal and water resource development at the Ministry of Energy and Mineral Resources, said in Jakarta on Thursday that investors would not be willing to take part in the tender until PLN have issued a price reference for power purchase agreements they may sign with the state owned firm.

?Investors hope PLN offer competitive prices that would enable them to cover the cost for the construction of the power plants,? he told Investor Daily. For geothermal power plants, the competitive price will be about 6-9 cents per kilowatt hour (kWh) because the average cost of such power plants could reach between $2.5 million to $3 million per megawatt, he said.

In the Phase Two fast track program, PLN expects to add another 9,963 MW to the national installed capacity. Of the total, 2,616 MW (about 26 percent) will come from coal-fired power plants, 1,440 MW (14 percent) from gas-fired power plants, 4,733 MW (48 percent) from geothermal power plants and the remaining 1,174 MW (12 percent) from hydropower plants.

The power plants will provide additional supply of 4,337 MW in Java and 5,626 MW outside Java. They need a total investment of about $17.25 billion.

Of the additional 9,963 MW power supplies, 3,649 MW will be provided by new plants to be built by PLN and the remaining 6,314 MW to be provided by power plants to be built by independent power producers (IPPs). (*)