Tangerang to lose billions of rupiah over electricity blackouts

Alfian ,  The Jakarta Post ,  Jakarta   |  Mon, 07/07/2008 10:31 AM  |  Business

Two weeks of rotating power blackouts planned to begin this week will cause one of the country's top industrial cities, Tangerang, to suffer hefty losses in potential revenue as factories cease operations, a business association says.

The secretary of Indonesia Employers Association (APINDO) for Tangerang, Juanda Usman, said the blackouts would force firms to limit orders and send workers home.

"This will cause potential losses for Tangerang's industries of between Rp 2 billion (US$2.17 million) and Rp 3 billion a day," Juanda said.

Tangerang is a Jakarta satellite city and an industrial zone housing more than 655 manufacturing firms on more than 3,400 hectares.

The executive secretary of the Indonesian Textile Association, Ernovian Ghazali Ismi, said each textile firm would suffer potential losses of between Rp 300 million and Rp 700 million for every eight-hour blackout.

He said producers could not raise their export prices to cover the losses because they had to compete with Chinese producers, who are able to sell textiles at lower prices because Beijing has reduced the export tax for textiles.

Ernovian said fiber, yarn and cloth producers could cover about 30 percent of their electricity needs with generators.

However, the producers are still heavily dependent on electricity from state power firm PT PLN.

PLN announced Friday it would impose rotating blackouts in Tangerang and Jakarta because of a disruption in gas supplies to run the 900 megawatt Tanjung Priok power plant and the 750 MW Muara Karang plant, both in North Jakarta.

The plants receive gas from multinational energy giant BP West Java, which is scheduled to halt gas supply for two weeks for routine maintenance of its central flow station.

According to PLN, Jakarta and Tangerang will face blackouts every day from July 11 until July 25, from 8 a.m. until 3 p.m., and from 3 p.m. until 10 p.m.

PLN Jakarta distribution manager Budi Nugroho said the supply of electricity to strategic places such as hospitals would be maintained.

Chairman of the Indonesian Association of Food and Beverage Manufacturers, Thomas Dharmawan, said big food and beverage firms in Tangerang could replace PLN's power with generators, but this would add 10 percent to their costs.

He said the companies might be able to maintain production during the blackouts, but they would still be affected in the distribution of their products at the retail level.

"Some products, like ice cream, require cold storage before they are sold," Thomas said.

He said the blackouts would have the biggest impact on small and medium food producers who could not afford generators.

Analysts have accused the Energy and Mineral Resources Ministry of mismanaging the energy sector, with vested interests playing a key role in blocking efforts to overhaul the energy sector.

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