Investment in Electricity May Exceed Target

5 July 2019

Govt upbeat investment in electricity will reach US$14 billion
Sharp increase in investment partly due to simplification in licensing procedures
The Energy and Mineral Resources Ministry is upbeat that investment in the electricity sector will increase more than 15 percent this year given the significant investments in the sector during the first five months of 2019.
Jisman Hutajulu, the ministry’s director of supervision for electricity programs, said in Jakarta on Tuesday that the government was upbeat that investment in the electricity sector would reach US$14 billion or 16 percent higher than the initial target.
“We are optimistic to reach our investment target of $12.04 billion, which could even reach $14 billion due to new power plants, transmission infrastructure and other efforts to ease the business process,” he said Tuesday.
As of May, the ministry recorded that investment in the electricity sector reached Rp 68.73 trillion ($4.74 billion) or a 34.65 increase from the figure recorded in the same period last year.
The ministry’s director general for electricity Rida Mulyana said the sharp increase in investment was partly due to the simplification in licensing procedures. “We see there is an increase every month. It could be due to the improvement in the administration process that is simpler, quicker, clearer and cheaper,” he said at the press conference.
About $1.13 billion of the investment was for the development of state electricity firm PLN’s power plants and the other $1.82 billion or 38.53 percent was for the development of power plants owned by independent power producers.
“About $165 million comprised investment from integrated private power plants or known as private power utility [PPU],” Rida of the ministry said. Furthermore, investment also came from the development of transmission, substation and distribution networks at $625 million, $264 million and $729 million respectively.
However, Fabby Tumiwa, the executive director of energy watchdog Institute for Essential Services Reform was not impressed with the amount, saying it was only “natural” growth.
“If there’s an improvement in investment realization, it was only because some projects in the 35 gigawatts [GW] program have finished construction or from those auctioned in 2017 and 2018,” he told The Jakarta Post in a text message.
“It is part of the natural business cycle that investment funds are disbursed in the construction phase. The bottom line is that for me the investment is still below its full potential,” he said.
There are at least seven new power plants that will be commercially operational by the end of this year, one of which is a 55-megawatts (MW) PLTP in South Sumatra.
The unit, which goes by the name PLTP Lumut Balai 1, is owned by Pertamina Geothermal Energy, the power subsidiary of state energy holding company Pertamina.
“From the 35 GW power plant projects, we expected to have another six units by year-end with 2.2 GW in power capacity, making a total of 5.8 GW new capacity this year,” Rida of the ministry said.
The other six projects consist of three coal-fired power plants (PLTUs), which if combined have a power capacity of 2.1 GW, namely Kalsel in South Kalimantan, Jawa-7 in Banten and Jawa8 in Central Java.
The remaining are the Air Putih hydropower plant in Bengkulu with a power capacity of 21 MW, Sukawinatan waste-to-energy power plant in South Sumatra with capacity of 0.5 MW and Maumere gas power plant in East Nusa Tenggara with capacity of 40 MW.
The 35 GW project was launched in 2015 by President Joko “Jokowi” Widodo and has reached 10 percent progress or around 3.6 GW, government data shows.
However, the deadline was then revised to 2028 due to a slowdown in electricity demand, the ministry said.
Closing the year with only 5.8 GW power capacity from the 35 GW project was also a contrast with what Energy and Mineral Resources Minister Ignasius Jonan said in March 2018. “We target to close 2019 with 10 GW of power capacity from the 35 GW project,” he said back then.
Commenting on this, Jisman of the ministry acknowledged that the government had revised the target because of the adjustments with the realization of electricity demand.
“We are not canceling the projects [in the 35 GW program], but only delaying when they will begin operation. We will adjust it with the demand for electricity,” he said.

Source: The Jakarta Post, 4 July 2019