The 3,767-circuit-kilometer power transmission network, with 5,687 transmission towers and 47 substations with a capacity of 2,648 mega volt amps (MVA), is the first stage of PLN’s extra-high voltage project in Sulawesi, dubbed the Sulawesi electricity transmission toll project.

PLN said in a statement on Thursday that the operation of the interprovince power grid could save the company Rp 44 billion (US$3.11 million) in operation costs each month from deactivating at least four diesel-fired power generators in the Kolaka, Lasusua, Lambuya and Wua-Wua areas.

“PLN can reduce fuel consumption by 22,615 liters per day, or around 678,450 liters per month and thus reduce production costs,” said PLN Sulawesi general manager Suroso Isnandar.

He said electricity production costs in the four provinces now stood at Rp 1,096 per kilowatt hours (KWh), down 7.7 percent from the prior cost in the southern Sulawesi region.

The electricity production costs in the region are now closer to that of mainland Bali and Java, where costs are less than the maximum Rp 989 per KWh as set under Ministerial Decree No. 55/2019 on electricity supply costs for PLN.

Reducing production costs is also necessary for PLN to maintain its profit margin, having recorded a net loss of Rp 5.34 trillion last year. The company booked net profits of Rp 7.35 trillion in the first half of this year thanks to a large compensation payment from the government and the large amount of foreign exchange gains received by the company during the six-month period.

“If such a reduction in diesel consumption can be realized, it's pretty significant, reaching 8.1 million liters per year,” said energy analyst Fabby Tumiwa, executive director at the Institute for Essential Services Reform think tank.

However, he also told The Jakarta Post that the four deactivated diesel plants, which have a combined capacity of 35 megawatts, only constituted a small portion of the country’s total 5 gigawatts diesel plant capacity.

Nevertheless, PLN Sulawesi and Kalimantan business director Syamsul Huda said the company was particularly eager to sell the lower cost electricity to Southeast Sulawesi “because there will be new business opportunities to sell electricity to industrial customers such as those related to smelters and mining companies”.

The company noted in a statement on Oct. 18 that it had signed power purchase agreements with four companies, including Makassar-based nickel producer Ceria Nugraha Indotama, that will consume a combined 634 MVA of electricity.

Southeast Sulawesi’s electricity consumption, which reached 1,158 gigawatt hours last year, is expected to grow 23.6 percent each year until 2028 — the highest growth rate on the island.

Bank Indonesia (BI) data shows that nickel remains Southeast Sulawesi’s largest export (98.1 percent of total exports), which the central bank projects will help drive annual economic growth up to 6.7 percent this year, higher than the nation’s expected 5.1 percent.

But contrary to PLN, the central bank is pessimistic about the growth of Southeast Sulawesi’s mining industry. BI recorded that the industry growth slowed to 6.5 percent in this year’s second quarter, lower than the 7.5 percent growth booked in the same period last year. BI expects the industry to grow not more than 6.5 percent in the third quarter.

“Unfavorable conditions in Southeast Sulawesi’s mining industry and rising US-China trade tensions are the main factors for slowed growth in the industry,” says BI’s provincial branch in its quarterly economic review.

Popular

RI, Australia strengthen partnership on taxing crypto assets

Analysis: Indonesia denies normalization with Israel to enter OECD

Citroen to produce electric cars in Indonesia