RI to delay liberalization in power sector
Wednesday, September 20 2000 - 04:00 AM WIB
The government would delay the planned introduction of free market system in the country's power sector, which was initially scheduled for 2003, director general of electricity and energy development Endro Utomo Notodisuryo said on Tuesday.
Endro said the government realized that it could not liberalize the power sector on the initial schedule given the economic difficulties being experienced by the public and the power purchase contracts signed by state-owned electricity company PT PLN with independent power producers (IPP).
The government could not thus far determine when it would be ready to implement the free market system, Endro added.
The government announced plans to introduce the so-called "multi buyers multi sellers" system in the country's power sector several years ago. The plan was backed up by the Asian Development Bank (ADB), which provided financing for PLN to design and to prepare the new system.
Under the new system, power producers are free to sell their power to the market, and the public is free to choose their power suppliers. Thus, the free market mechanism rather than the government will determine power price.
Under the current system) all power producers have to sell their power to PLN, which controls the power network. PLN then sells the power to the public at the price set by the government.
Endro said the introduction of the "multi buyer multi seller" system would lead to the high rise in power price, which would be too burdensome to the public amid the economic difficulties.
The power price, which currently averages Rp 280 or 3 US cents per kilowatt flour (kwh), could rise to the pre-economic crisis price of 7 cents if the free market system was introduced, Endro said.
He also said the free market system would also require IPPs to change their power purchase contracts with PLN, which they are not ready to do. Under the contracts signed by IPPs and PLN; PLN has to buy power from the IPPs at the price set in the contracts.
Endro said the government was lobbying ADB to agree upon its plan to delay the implementation of the free market system. (Lia KS)