Wood Mackenzie: Power crisis threat looms in Indonesia
Monday, July 14 2003 - 11:44 PM WIB
Throughout this period Java-Bali will be subject to load shedding, blackouts, and a negative effect on economic growth, said the study called "Looking Over the Edge?The Prospects for Java-Bali Gas & Power."
"The successful removal of direct fuel subsidies has provided a market in which once again gas is economically preferred to oil," said Noel Tomnay, WoodMac principal consultant. "Indeed, at prevailing gas prices, newbuild gas power plants are cheaper than new coal plants providing major opportunities for potential gas suppliers to the Java market. The period up to 2010, in particular, bodes well for suppliers in South Sumatra and Java; post-2010, LNG could also enter the market, although the potential for this will be governed, in part, by the success of future exploration efforts in these regions."
From 2005, WoodMac believes the gas market dynamics will change with the completion of state electricity company PT PLN's southern electricity transmission loop integrating East Java and West Java markets.
"The recent electricity law also provides new opportunities for regional governments to establish power plants, providing added impetus to the captive power market and the provision of further alternative buyers of gas into power other than PLN," said Tomnay.
Development of supply options and the plant construction hinges upon the availability of investment dollars in Indonesia.
"Despite its recent sovereign credit rating improvement, the country continues to be classed as high risk. For global power companies in particular, the past 18 months have been among the most difficult in recent times," the report noted.
It examines the likely evolution of the Java-Bali gas and power markets in the context of a constrained investment climate and provides strategic guidance for upstream, midstream, and power companies.(*)