Under the power purchase agreements (PPA) signed on Friday, PLN partners PT Medco Ratch Power Riau and PT Minahasa Cahaya Lestari will build a $300 million steam and gas power plant (PLTGU) with a capacity of 275 MW in Sail district, Pekanbaru, Riau, and a $215 million coal-fueled power plant (PLTU) with a capacity of 2x50 MW in Kema district, North Minahasa, North Sulawesi.

PLN will distribute electricity amounting to 1,446 gigawatt hours (GWh) each year from the Riau power plant to the central and southern Sumatra power networks when it commences operation in 2021. Meanwhile, it will distribute 700 GWh annually from the second one, named the Sulut-3 power plant, through the Sulutenggo power network.

PLN procurement director Iwan Santoso said the two deals, the first PPAs it had signed under an independent power producer (IPP) scheme this year, signalled progress in meeting the government’s target of powering up the country by 35,000 megawatts, even though they would not be operational before the 2019 deadline.

He added that the firm would speed up power distribution to regions with the most power needs.

“We’re looking at signing 8,000 megawatts worth of PPAs this year. So far we have achieved about 4,000 MW for the first half of this year, including these [two new projects]. But all projects for which contracts have been signed are in progress,” Iwan said after signing the agreements.

The massive power generation target set by the current administration aims to achieve a 30 percent surplus in the country’s electricity reserve margins with higher operational costs. The domestic procurement capacity now stands around 56 GWh.

Last year, PLN managed 3,714 MW, of which 1,932 MW came from its own resources and the remainder was procured from IPPs.

The company claims it has signed PPAs for 22,000 MW since the 35,000 MW target was set in 2015, not long after President Joko “Jokowi” Widodo’s tenure began.

Responding to a report recently made by the Development Finance Comptroller (BPKP) regarding 34 stalled power plant projects by PLN, Iwan commented that most of the 34 projects were projects outside Java, and claimed that 23 of the projects were currently in progress while 11 had been terminated.

Termination was possible due to construction not being started or stalled land acquisition.

The BPKP report is being analyzed by the Corruption Eradication Commission (KPK).

Iwan further said that after the latest PPAs were signed, each company would have to acquire its own funding for the power plant projects within one year as they were to be developed without any financial support from the government.

PT Medco Ratch Power Riau is a joint venture between PT Medco Power Indonesia, a subsidiary of local energy giant PT Medco Energi, with 51 percent shares and Thailand’s Ratchaburi Electricity Generating Holding pcl with 49 percent shares.

Meanwhile, PT Minahasa Cahaya Lestari is a joint venture that is 90 percent owned by PT Toba Bara Energi, a subsidiary of coal miner PT Toba Bara Sejahtera, and 10 percent owned by China’s Sinohydro Corp. Ltd.

The Sulut-3 plant is set to become the second coal power plant of PT Toba Bara Sejahtera that supplies electricity to PLN after the Sulbagut-1 project in July last year.

Toba Bara Sejahtera director Arthur Simatupang said the project would boost the local coal industry.

“The success of this company in becoming the PLN’s partner is a good sign for the coal industry, and for coal companies in Indonesia, as it supports the optimization of our work so that the public can bask in its benefits,” he said during the signing of the agreement.

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