T

he government is exploring the possibility of withdrawing state-owned electricity company PLN from operating in six provinces in the eastern part of the country in order to speed up the construction of new power plants in the regions.

Energy and Mineral Resources Minister Sudirman Said explained the government would then name local administration-owned companies or other state'€“owned companies to replace PLN, which at present controls electricity distribution in the country.

He hoped that the change would be able to boost the supply and electrification ratios in those areas, which are mostly archipelagic and less attractive for big investments. The six provinces are Papua, West Papua, Maluku, North Maluku, East Nusa Tenggara and West Nusa Tenggara.

The provinces are the '€œdarkest'€ areas in the country as they host 70 percent of the total 12,699 villages in the country that have no electricity supply, Energy and Mineral Resources Minister Sudirman Said explained.

'€œTherefore, we are planning to discharge the electricity operation [from PLN]. If it is necessary, we will appoint [other] state-owned enterprises or local administration-owned firms to manage electricity. Those areas have distinct characters and geography, meaning that they will need different approaches [for development],'€ Sudirman said.

The country has an installed power generation capacity of around 55,000 megawatts (MW), with an electrification ratio of 88 percent. However, there are numerous areas with a lower ratio, including the six provinces. Papua province has the lowest electrification ratio in the country at only 44.4 percent. Meanwhile, East Nusa Tenggara is the second lowest with about 57 percent.

'€œThe plan will cut short the chain in the decision-making process so that development will be more focused and can be accelerated,'€ said Jarman, the ministry'€™s director general for electricity.

He pointed at the electricity operation in the Batam area, which is currently managed by PLN Batam.

'€œThere are various models currently in consideration, such as appointing a PLN subsidiary like PLN Batam, or name other companies to take over PLN'€™s jobs,'€ he said.

Jarman added that the government was also considering involving private entities in the electricity operation.

'€œHowever, we cannot fully give the business to private firms. The government has to be in control,'€ he said, adding that pricing would be regulated by the central government if local administrations could not carry out the duty.

The government plans to build a number of major power plants in order to meet its ambitious target to add at least 35,000 MW to the power supply by 2019. However, most of them are located on big islands, particularly Java and Sumatra.

According to the plan, many of the power plants, which are designed to have a combined generation capacity of 30,000 MW, will be built by independent power producers. PLN is expected to build plants with only about
a total 5,000 MW capacity so that the company can focus on transmission projects, according to Sudirman.

PLN, which has long dominated electricity distribution and transmission, reported sluggish growth in power sales last year: only 2.1 percent to 200.6 terrawatt hours (TWh) compared to 196.42 TWh in 2014. The company is expecting to see around 6 percent growth in sales this year.