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Obstacles likely to handicap govt'€™s five-year electricity targets

While the government has taken several steps to accelerate its ambitious power-plant development plans, issues like land acquisition and lengthy explorations are poised to aggravate efforts to add 35,000 megawatts (MW) to Indonesia’s electricity grid in the next five years

Raras Cahyafitri (The Jakarta Post)
Jakarta
Tue, January 27, 2015

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Obstacles likely to handicap govt'€™s five-year electricity targets

W

hile the government has taken several steps to accelerate its ambitious power-plant development plans, issues like land acquisition and lengthy explorations are poised to aggravate efforts to add 35,000 megawatts (MW) to Indonesia'€™s electricity grid in the next five years.

Combined with around 7,000 MW in projects already in the pipeline, the government'€™s target currently exceeds 42,000 MW.

Energy and Mineral Resources Minister Sudirman Said highlighted eight issues that would frustrate attempts to realize the ambitious electricity program.

The eight issues are land acquisition, price negotiation between state electricity company PLN and developers, selecting private developers, permits, contractors'€™ competence, management capacity, cross-sector coordination and legal matters.

As part of the effort to address the issue, the ministry has issued several regulations, including a requirement to perform due diligence as well as the appointment of an independent procurement agent.

'€œThe completion of the first and second phase of the Fast Track Program for electricity is delayed, partly because there are electricity equipment providers that are not meeting standards,'€ Sudirman said.

'€œDuring the APEC meeting, President [Joko '€œJokowi'€ Widodo] said that the Chinese technology [used in the two programs] has caused problems, while there was also a rushed appointment [of private developers]. That'€™s why we are performing due diligence,'€ he added.

Recently, the ministry officially handed over the issuance of permits for electricity projects to the Investment Coordinating Board (BKPM) and its newly launched one-stop licensing service system.

One of the biggest challenges to realizing the targets for power-plant development is reportedly related to the acquisition of land. Figures from the Energy and Mineral Resources Ministry showed that of the 508 total projects, only 383 projects had already secured the required land.

The 2012 law on land usage for public facilities is expected to ease the land acquisition process for power plant development, but implementation will take time.

The law stipulates a maximum of 208 days to resolve questions over land rights through public consultations or a court verdict. Identification of land ownership will take 72 days, while dialogue on the amount of compensation will take 118 days.

There is mounting skepticism that the development of some 42,000 MW sourced from new power plants within five years can be attained, especially considering that several geothermal power plant projects have been delayed.

PLN director Nasri Sebayang said out of the 42,000 MW, some 6,000 MW were expected to be generated by geothermal power plants.

According to Nasri, a more realistic target would be 2,600 MW.

'€œThis is due to the nature of geothermal plant development. Most of the projects currently remain in the exploration stage, which will take around three years. Therefore, only around 2,600 MW will be finished in time,'€ Nasri said.

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