T

he Ministry of Energy and Natural Resources has approved a new power purchase price for use between state electricity utility PT PLN and independent power producers (IPPs), an officials said by a statement on the late Friday.

The company’s business and risk management director Murtaqi Syamsuddin said that the new price for renegotiation between PLN and IPPs would range between 7 US cents and 8.5 US cents per kilowatt hour (Kwh), depending on the type of power plants and their capacities.

“The price is based on some assumptions, for example, that the price of coal is $62.05 per ton and the dollar exchange is not more than Rp 10,000,” Murtaqi said.

The government is focusing on 25 IPP projects that have mostly been delayed due to lack of funds.

He said that two out of the 25 delayed IPPs—the 20-Megawatt Tanjung Pinang power plant and the 200-megawatt (MW) Jenepoto power plant—had received approvals for Power Purchase Agreements (PPAs) from the ministry, while the rest of the agreements were still going through a verification process.

“Around 17 IPPs are still waiting approval from the minister after some verification from the Development and Finance Surveillance Agency (BPKP) and 5 IPPs are still reviewed by the ministry,” Murtaqi said, adding that however that the provisional PPA for one IPP; that of the proposed Bangka power plant, had been terminated.

On Friday, Kardaya Warnika, an expert staffer for the Energy and Mineral Resources Ministry, mentioned to reporters that the ministry had settled two delayed IPPs.

“We have issued the approval for the two IPPs, however, the PPA prices will be announced soon,” he said.

Murtaqi said that PLN would expect to gain additional power capacity of up to 1,924 megawatts from these mostly 25 delayed IPPs to help the company provide electricity to consumers.

PLN has so far been the sole distributor of electricity in the country. IPPs are allowed to generate power but must sell the power to PLN. However, the recently passed electricity law will allow private businesses to generate and distribute power in areas not served by PLN.

Implementation of the new law has not yet started since this depends on the promulgation of three new enabling regulations — on electricity supply businesses, on electricity exports and imports, and on electricity supporting services.

IPPs currently contribute about 14 percent of the total 30,000 MW of energy produced in the country for the PLN grid.

According to Murtaqi, based on data from the Indonesian electricity producers association (APLSI), there are more than 25 delayed IPPs which have not reached final agreements on the prices for their provisional PPAs. Most of these proposed power stations face funding difficulties. However, PLN hopes to now settle the renegotiation of the PPAs for these 25 IPPs, some of which are already built or operating, while most are under construction.

“We are also trying to settle the PPAs for the IPPs that are seeking capital but have prepared their power plant proposals,” he said.

The government expects the proportion of power to be provided by IPPs to increase under the second 10,000 MW accelerated electricity program. Of the total power to be produced, amounting to 10,153 MW, PLN is expected to generate 5,118 MW and IPPs are expected to generate 5,035 MW, respectively.