S

tate-owned electricity firm PLN is scheduled to commence the construction of several new power plant projects as part of the government'€™s ambitious program to provide an additional power supply of 35,000 megawatts (MW) by 2019.

The projects are, include combined-cycle power plants (PLTGU) in Gorontolo, North Sulawesi, and in Grati, Pasuruan, East Java, and other smaller power plants in 50 outer islands near the country'€™s border.

Iwan Purwana, head of the strategic procurement division for PLN, said the Gorontalo power plant would have a capacity of 100 MW, while the Grati power plant would have a 450 MW capacity.

'€œThe ground-breaking ceremony for the Gorontalo power plant will be held on Aug. 14, after we complete the tender process for its contractor,'€ Iwan recently told reporters at the company'€™s headquarters.

During the tender process, Iwan said the company would ensure that the prospective contractor was experienced in power plant construction and had a fine level of compliance toward its contract.

'€œWe will negotiate the price afterwards. Price is second for us, because we put verification as the most important point,'€ Iwan said.

Aside of those projects, Iwan said PLN was processing the tender for power plants in North Jakarta, which include a 500 MW expansion project at PLTGU Muara Karang and an 800 MW expansion project at PLTGU Tanjung Priok. The contracts for the two projects are expected to be signed in December this year.

About 10,000 MW of the 35,000 MW worth of power plants to be built by 2019 will come from PLN'€™s own facilities, while the remaining 25,000 MW will come from plants to be built by independent power producers (IPPs).

IPPs will sell their electricity to PLN under a long-term contract. The prices are to be fixed depending on the type of the power plants they build.

At present, Indonesia has total power supply of 53,000 MW.

PLN previously revealed that the development of power plants to generate the new 35,000 MW, which will use various energy sources from coal to hydro, would need a total investment of Rp 814 trillion (US$60 billion).

The construction of the plants by the private sector to produce the 25,000 MW of power will cost Rp 615 trillion while PLN will require Rp 199 trillion in investments to build the plants for the 10,000 MW.

PLN is relying more on loans to finance its projects because of its weakening financial condition. The state-owned electricity company suffered a loss of Rp 10.5 trillion in the first half of 2015 because of falling revenues and a weak rupiah. In the same period last year, it posted Rp 14.5 trillion in profits.

As it has suffered big losses, PLN is preparing a zoning program for coal usage and resources for the future power plants under the 35,000 MW program in order to increase efficiency.

In the program, PLN will try to locate coal reserves near the future power plants to reduce transportation costs and minimize the reduction of the coal'€™s calorie levels.

'€œWe will start a presentation with a consultant about the zoning program, which will divide coal resources into around six to seven zones across the country,'€ said Harlen, the head of PLN'€™s coal procurement division.

In the past, PLN built several mine-mouth power plants in South Sumatra in order to save transportation costs. As the power plants are built within a coal mine, the transportation costs could be significantly reduced.