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Indonesia state owned PLN under pressure to expedite contract agreements with smaller independent power producers – Andalas Energy & Power
The government’s 35,000 megawatt (MW) electricity procurement program has continued to show sluggish progress, as development contracts for half the targeted capacity have yet to be completed more than a year after the launch of the flagship program.
The ambitious program, with a completion target of 2019, will require the construction of 219 power plants and 737 transmission facilities consisting of 75,000 towers, 1,375 main stations, 2,600 transformers using 300,000 kilometers of aluminium cable.
The program is expected to help increase the national electrification ratio to 97 percent by 2019, up from the current ratio of 88.3 percent.
However, the latest data presented by state-owned electricity firm PLN shows that as of September, only 232 MW of the total 36,722 MW targeted to be procured had reached its commercial operating date, or was already in operation.
Furthermore, PLN still needed to wrap up 17,984 MW worth of development contracts for power plants to get the program moving.
Up to 11,729 MW comprises power purchase agreements (PPA), while the remainder are PLN’s engineering, procurement and construction (EPC) contracts.
Even so, the state-owned firm has only targeted the completion of 14,069 MW worth of development contracts, with PPA’s making up the majority of the contracts targeted.
PLN president director Sofyan Basir noted that there were several setbacks in the wrapping up of development contracts because of the recent revision of PLN’s electricity procurement business plan (RUPTL) for 2016-2025.
“We have had to rearrange the positions of several power plants of our EPC. However, we will try to make up for it by expediting contract agreements for both EPC and IPP [independent power producers] of smaller projects in the outer regions,” he said during a hearing with the House of Representatives Commission VII overseeing energy on Thursday.
PLN also wrapped up on Thursday the contract tender for the Jawa I steam-fueled power plant project. The project, which will result in two power plants with a capacity of 800 MW each, was won by a consortium made up of state-owned oil and gas company Pertamina, Japan’s diversified group Marubeni Corp. and Sojitz Corp.
An estimated investment of US$2 billion will be needed for the construction of Jawa I, which is expected to start operating by 2019.
Despite the setback, the government is positive that the targeted contracts will be wrapped up by the end of the year. The Energy and Mineral Resources Ministry’s electricity development program director, Alihuddin Sitompul, said the government had learned its lesson and had given PLN full authority over the contract auctions and the ability to directly appoint IPPs for renewable energy, mouth-mine and marginal gas power plants.
PLN may also be hinging its success on mobile power plants (MPPs), which make up around 4,000 MW of the project, as they can also be assigned through direct appointments and take less than six months to be operational.
Full story here