Editorial: The power crisis

Fri, 02/22/2008 5:00 AM | Opinion

Massive floods early this month crippled almost 60 percent of Jakarta for two days, causing large economic losses.

The logistic costs for many industrial firms in the capital city and surrounding towns increased sharply after the January floods, because their trucks were stuck in traffic gridlocks along heavily damaged roads to Jakarta's Tanjung Priok seaport.

The State Electricity Company (PLN) imposed rotating power blackouts in Jakarta and surrounding suburbs starting Wednesday because power supplies across its Java-Bali interconnected system suffered a deficit of 1,000 megawatt.

The reason? Four PLN generation plants have been forced to operate far below their installed capacity after unusually high sea waves interrupted coal and diesel supplies to its power stations.

This list of crumbling infrastructure can go on and on.

Last June, partial blackouts also hit several areas in Java and Bali as PLN suffered a deficit of 500 MW caused by simultaneous technical problems at five of its power stations in Java.

A massive power failure took place in November 2006, in August 2005, and in May and early December 2003. In many provinces outside Java-Bali, rotating blackouts have been common since 2002 due to inadequate generating capacity.

But the frequency of total power failures or rotating power blackouts seems to have increased. This is quite damaging because in our modern economy, virtuallly nothing can happen in commercial terms without electricity.

What is mind-boggling about the cause of the latest power shortage is the unfavorable weather conditions, a seasonal phenomenon, had been forecasted as early as last December.

We find it hard to understand why PLN's logistics department was so ignorant it had not put in place a contingency program to secure adequate supplies of coal or diesel oil in anticipation of such shipment problems.

True, most companies now try to minimize the costs of inventory to a few hours if possible, but this kind of arrangement is too risky for PLN, especially because its coal-fired plants are located mostly in Java, while coal supplies are derived from Sumatra and Kalimantan.

The latest blackout threat also signals once again a serious warning that PLN's power supply capacity is already at a critical level, or is dangerously low.

Given the inadequate transport infrastructure, seasonal weather conditions and the geographical spread of PLN's generation stations, PLN's installed capacity should have been at least 30 percent larger than the demand during the peak-load period.

This reserve is necessary to secure a reliable supply during an emergency -- caused either by scheduled maintenance of power stations or coal or diesel-oil supply disruption to generation plants.

The power supply capacity has increasingly been critical, especially since 2004, when the annual economic growth accelerated to more than 5 percent.

The government made the right move in 2006, when it launched a crash program to build an additional power-generation capacity of 10,000 megawatt, but this program seemed to have been bogged down in bureaucratic inertia, cumbersome tender procedures and political bickering over government guarantees for project financing.

Without leadership and firm decision-making on the part of the government, the crash program could really "crash" into failure and our electricity supply will remain in a critical condition.

We find it simply flabbergasting the government has not yet grasped the urgency and magnitude of the problems caused by our crumbling infrastructure in transportation and electricity, which has often been cited as one of the biggest barriers to new investment.

The competitiveness of many export products has weakened due largely to grossly inefficient logistical arrangements involving transportation, port handling and customs service.

As Trade Minister Mari E. Pangestu observed here Tuesday, "our electronics firms have been suffering heavily from crumbling infrastructure because poor road condition makes it extremely difficult for them to implement just-in-time delivery of their products to the market".

"The competition is now so fierce that electronics companies now talk about the costs of inventory in terms of hours, instead of weeks or months," she said.

Adequate infrastructure is indeed a key to efficient logistical management, which is in turn a prerequisite to facilitate just-in-time delivery and to put Indonesia in the global supply chain.

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