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onstruction and operation of 50 small and medium power plants operated by independent power producers (IPP) have slowed down due to financing problems and increasing costs, an official said Monday.

The power plants have a total capacity of about 500 megawatts (MW) and all of them are located outside Java, J. Purwono, director general for electricity and energy utilization at the Energy and Mineral Resources Ministry said.

"Some of the projects had to be stopped because of problems in financing and the increasing cost of materials and EPC *engineering , procurement and construction*," Purwono said.

Included in the power plants are the 2x50 MW Embalut Power Plant in East Kalimantan; the 35 MW Palu Power Plant in Central Sulawesi; the 2x110 Sarula Power Plant in North Sumatra; and the 2x70 MW Bangka Power Plant in Bangka Belitung.

"Some of the power plants were supposed to start operation in the middle of this year.

"The Embalut and Palu power plants have been in operation, but now they have problems as they must cover high coal prices *to fuel the plants*," Purwono said.

He added that, to help deal with the problems, the government would facilitate a renegotiation between state utility company PT Perusahaan Listrik Negara (PLN), the sole buyer and distributor of electricity, and the 50 IPPs.

"The electricity prices and other term and conditions, such as the operation schedule, will be renegotiated," Purwono said.

"The renegotiation is important because the projects are also state assets.

"If these projects are terminated, we must start *again* from the beginning and this will require much more time. We expect that both PLN and the IPPs will benefit from the renegotiation," said Purwono.

He added that the renegotiation would form part of the new Energy and Mineral Resources Minister's 100 days program.

PLN is still the sole distributor of electricity, at least until 2010. IPPs may generate power but they must sell the power to PLN.

However, the recently passed electricity law will soon allow private businesses to both generate and distribute electricity.

The contribution of IPPs to the country's electricity system is still small as the projects often face difficulties in financing. Currently, IPPs contribute about 14 percent of the 30,000 MW of power generated within the PLN system.

The government expects IPPs to contribute more via the second phase of the 10,000 MW accelerated power program.