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Editorial: Bigger power crisis looms
The government seems increasingly unable to cope with the acute power shortage that has gotten worse over the past three years
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The government seems increasingly unable to cope with the acute power shortage that has gotten worse over the past three years. Power blackouts have hit more areas and happen more often. There is almost no improvement in the supply-capacity ratio, in sharp contrast to high growth in power consumption, generated by comparatively strong economic growth (5.5 to 6.3 percent).
The reserve margin of supply capacity of the state electricity company (PLN) is now so low, at just half of the recommended minimum 30 percent required to ensure supply stability (above the demand during peak-load period), that a stoppage at just one major power station could cause a massive blackout.
Another major blackout hit Jakarta and parts of Java last week because the 600-megawatt Cilacap power station on the southern coast of Central Java stopped operations due to shortage of coal.
In February, PLN was forced to impose rolling blackouts in Java because four power plants could not operate at full capacity, causing a deficit of 1,000 megawatts in the Java-Bali electricity grid.
This also related to coal supply problems but for a different reason. Unusually high waves interrupted coal supplies to the power stations. What a poorly managed coal stockpile.
In many provinces outside Java-Bali, rotating blackouts have been common during the past three years due to acute lack of power supply. Latest reports say that South Sumatra and Riau provinces may suffer rotating power outages during the next two to three months.
The power shortage in Jakarta and its surrounding areas could also worsen within the next two weeks because maintenance work on the gas pipelines to the Muara Karang and Tanjung Priok plants may temporarily shut down the two stations starting July 11, according to Kompas daily.
The Cirata and Saguling hydropower stations in West Java, which have a combined capacity of 1,800 MW, may also have to operate below capacity during the current dry season due to reduced water intake.
Needless to say, power blackouts severely disrupt industrial and other production processes, damaging the economy as a whole.
Yet more worrisome is that the government seems to have no convincing contingency measures to prevent the looming power shortage from worsening into an even bigger crisis. The crash program it launched in 2006 to build 10,000 MW of additional power-generation capacity has been bogged down in bureaucratic inertia, cumbersome tender procedures and political bickering over government guarantees for project financing.
Vice President Jusuf Kalla said last week that while some of the plants built under the crash program would begin to come onstream in 2009, most of them would only start operations in 2010.
In the meantime, the risks of a bigger power crisis have further increased because steep rises in the prices of coal and diesel oil are seriously hitting the finances of PLN.
Unlike the prices of oil for industrial users which have been floated on international market prices, PLN is required to sell electricity to all categories of users at government-fixed prices. These electricity rates cannot be changed without approval from the parliament, while the prices of the diesel and coal that fire most PLN power stations have been rising steadily and steeply over the past 18 months.
Things could become even worse for PLN before they start to improve. The sharp increases in diesel prices have prompted many companies to stop operating their own captive power units, relying instead on power supply from PLN.
This is a mounting crisis that requires emergency measures. The government has no better alternative but to accelerate the building of the new power plants under the 2006 crash program. Our economy is already adversely affected by the weakening global economy, costlier energy and the global credit crunch. Power shortages and blackouts could become a bigger drag on our economic growth and perhaps the largest single obstacle to new investment.
The government also needs to improve the electricity pricing mechanism to force industrial users to invest in energy-efficient machinery and household users with high load-capacity connections to economize on electricity.
Selling power at its economic cost also will have a bearing on the viability of investment in power generation, which has a long-term payback period.
