Velcan continues to face uncertainties over power plant projects in RI
Saturday, April 29 2017 - 07:40 AM WIB
EPA-listed power company Velcan Energy said it is still trying to find a solution to the regulatory deadlocks faced by a number of its hydro power plant projects in Indonesia.
?Given the administrative uncertainties it is impossible for Velcan to make any forecast related to the development planning or the perspectives in this country for all its projects with a good level of confidence. This is a countrywide problem and all developers are facing similar difficulties,? Velcan said in a statement on Friday.
Velcan said the regulatory uncertainties related to the hydropower purchase agreements terms and tariffs have not yet been cleared, resulting in most hydropower projects in Indonesia remaining stalled.
The latest regulation issued by the Indonesian Minister of Energy and Mineral Resources in March 2017 has resulted in tariffs capped to 85 percent of the so-called regional electricity supply cost (or BPP) of state-owned electricity firm PT PLN where the project is located, applicable to all hydropower projects regardless of capacity. The tariff structure could have had a positive impact, but given the production costs retained, this practically means hydropower tariffs would remain unattractive for less than 10 MW projects, Velcan said.
It has caused strong reaction from industry professionals and investors. The numerous reactions and discussions under progress have not yet resulted in a favorable outcome for hydropower projects.
For these reasons, Velcan said, the situation of the Sukarame hydro power project (7 MW) in Lampung Province, for which the company had to suspend the construction in March 2016 due to unavailability of power purchase agreement (PPA) with PLN, has not yet changed.
Velcan?s Meureubo 2 (59 MW) hydro power plant project in Aceh Province faces the same administrative uncertainties and has not yet obtained a PPA due to administrative disagreements with PLN concerning the PPA negotiation process.
?The Group is actively engaged in discussions with several potential partners to try to find suitable outcomes,? said Velcan, which in 2016 abandoned the Bilah (62 MW) hydro power plant project in North Sumatra following the negative technical results received.
Editing by Reiner Simanjuntak