Electricity producers upset over postponement of power projects

News Desk

The Jakarta Post

Jakarta

Jakarta, posted: Fri, September 7, 2018 | 11:49 am

An aerial view of the Sarulla geothermal power plant in North Tapanuli regency, North Sumatra.(Courtesy of/Sarulla Operations Ltd)

The Indonesian Private Electricity Producers Association (APLSI) has expressed concern over the government's plan to postpone the construction of power plants worth US$23.9 billion.

APLSI spokeman Rizal Calvary said state-owned electricity company PLN did not give a detailed explanation about the reason behind the postponement.

“[The postponement] upset [those] who have an interest in the projects, particularly the creditors,” he said in Jakarta on Thursday as quoted by kontan.co.id.

Energy and Mineral Resources Minister Ignasius Jonan said previously the government would postpone the construction of 15,200-megawatt (MW) power plant projects, equal to 43.43 percent of the 35,000 electricity projects planned by the government.

The electricity projects mostly imported materials, with local content at only 20 to 39 percent.

The postponement plan is part of the government's effort to curb imports to prevent the current account deficit (CAD), which now stands at 3 percent of the country’s gross domestic product, from widening. The CAD adds to strong pressure against the rupiah as a result of global economic uncertainty.

Rizal said certain parties wanted to use the international arbitration mechanism if the government went ahead with its plan to postpone the electricity projects. He did not go into detail about which parties might use the mechanism.

 “It depends on how the government communicates with independent power producers (IPPs),” Rizal said, adding that PLN and the government needed to inform the IPPs about the details of the projects that would be affected by the postponement. (bbn)

TOPIC

IPP-independent-power-producers power-plants project postponement