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PLN advised against acquiring PGE stake
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Workers simulate a rescue operation at a tower belonging to state-owned utility firm PLN in Depok, West Java, in March. (JP/Dhoni Setiawan)
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tate-owned utility firm PLN's plan to acquire a 50 percent stake in the geothermal energy unit of Pertamina is neither urgent nor at all recommended, an observer has said.
Indonesian Resources Studies (IRESS) Marwan Batubara suggested that instead of acquiring shares in Pertamina Geothermal Energy (PGE), PLN should focus on the 35,000 megawatt (MW) program to improve energy security in the country and provide cheap electricity.
"Given its limited finances, rather than expend funds for the acquisition of PGE, it would be better for PLN to focus on power plant construction, electrical substations and transmission lines in the 35,000 MW program," Marwan said in Jakarta on Thursday.
According to current plans, PLN will only provide about 5,000 MW of the additional capacity under the program, while the remaining 30,000 MW is set to be contributed by independent power producers (IPP). "The cost per kilowatt hour (kWh) of electricity from IPPs is higher than the cost of electricity generated by PLN," he went on.
Electricity supplied by PLN is about 20-25 percent cheaper than that from IPPs.
Based on PLN statistics, 2015 electricity production amounted to 176,472 GWh, 57,509 GWh of which came from IPPs. PLN’s contribution is estimated to fall to 69,000 GWh by 2019 (19.2 percent) while that of IPPs is seen to rise to 273,000 GWh (79.8 percent).
"PLN’s portion in the 35,000 MW project has to be increased. Thus, rather than use the funds for the acquisition of PGE, it would be much more relevant for PLN to build power plants in order to minimize the dominance of IPPs," he said. (evi)
