Small Power Plants Wary of Government

Thursday, 23 November 2017 , 16:00:00 WIB -

Workers are seen maintaining an electricity line in Solo, Jawa Tengah, Friday (20/10). (ANTARA)

JAKARTA, GRES.NEWS – The government’s instruction to PT PLN to revise power purchase agreements (PPA) has raised concern not only among large power plants, but also small and local power plants.

"They (the government, reid) can easily revise contracts with large power plants. How about contracts with small power plants? They can do this to large power plants. What about the small ones?" said Fabby Tumiwa, an energy expert, in a press release sent to, Wednesday (Nov.22).

Indonesian Private Power Producers Association (APLSI) General Treasurer, Rizka Armadhana, said the move will taint the sanctity of the contracts.

He also warns the government that investors will translate the revisions as business uncertainty and financial institutions will raise the credit risk score of power plant projects.

"They (financial institutions, red) will deem that regulations [in the sector] can change easily. Hence, they will raise the cost of fund for investors applying to borow their money to build a power plant in the [35,000 MW] Program," Rizka said.

PT PLN is currently revising the PPA with two power plants, 1,200 megawatt (MW) PLTU Jawa 3 steam power plant and the 1,000 MW PLTU Cirebon Expansion 2.

The state-run electricity company is negotiating with independent power producers (IPP) to build power plants that can offer electricity at the price of below US$6 cents per kWh. (mag)