More than three years after the government launched a program to add 35 gigawatts (GW) of power generation capacity to national supply, only 3.6 GW have been realized, data from state-owned electricity firm PLN shows.
The initial target was to wrap up the entire 35 GW program in 2019, the final year of President Joko “Jokowi” Widodo’s first presidential term. That deadline has since been moved back to 2024 or 2025, because of slower than expected growth in electricity demand.
PLN, which is directly responsible for contributing 10 GW or 28.5 percent to the planned new capacity, said most of the projects were still in the construction phase. These accounted for 20.11 GW or 57 percent of the total 35 GW.
PLN’s acting president director, Djoko Abumanan, said power purchase agreements for another 27 percent of the total capacity, or 9.5 GW, had been signed, but construction had yet to begin.
“The projects that are in the procurement phase [make up] 4 percent or 1.4 GW, and those that are still in the planning phase [account for] 2 percent or 732 megawatts,” he said in a hearing at the House of Representatives on Thursday.
PLN’s projects within the 35 GW program that have reached the operational stage account for 2.2 GW, while those of independent power producers (IPPs) account only for 1.3 GW. However, IPPs has more capacity in the construction phase at 15.7 GW, while PLN has only 4.3 GW.
PLN noted several challenges for the completion of the 35 GW program, starting from the initiation phase to the phases following construction.
During the initiation phase, which is before a power plant project is agreed on, PLN has to synchronize it continuously with the demand stipulated in the electricity procurement business plan, which is renewed every year.
Djoko said the operation of new power plants next year could bring down basic electricity prices thanks to lower operating costs.
“When the new power plants from the 35 GW program enter operation, they are supposed to [bring down prices], as the operating costs are lower [for coalfired power plants],” he said.
According to the firm’s data as of March, 61.82 percent of the firm’s electricity comes from coal, followed by gas at 21.01 percent and hydropower at 7.51 percent. As of March, coal-fired power plants accounted for 29.02 GW or 49.7 percent of PLN’s generating capacity of 58.39 GW, while gas power plants added 17.17 GW. The new projects, however, have pushed up the company’s debt, with data showing that loans from December 2015 to March 2019 totaled Rp 160.7 trillion (US$11.3 billion).
PLN finance director Sarwono Sudarto explained that the firm’s outstanding debt as of March totaled Rp 394.2 trillion. “We will raise up to $2 billion from new loans this year to finance our investment, which stands at around $6.3 billion a year,” he said, adding that the firm would seek the loans before the end of the year.
Sarwono said the company was open to various types of debt, including global bonds and bank loans. The final decision on the type of loan would depend on the market situation. In early June, rating agency Standard & Poor’s (S&P) upgraded the rating for PLN to BBB/ stable from BBB-/stable, saying it took into account the fact that PLN had an important role for the government.
Source: The Jakarta Post, 4 July 2019