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PLN Pushing to Build 10,000MW Power Plants

State power firm PLN will be running on all cylinders this year to achieve the government’s ambitious electricity procurement program, aiming to break ground for a number of power plants with a combined capacity of 10,000 megawatts (MW).

PLN’s director for procurement, Supangkat Iwan Santoso, said a number of big coal-fired power plants were included in the target.

“If we talk about the capacity, the biggest will be coal-fired power plants. We are expecting the groundbreaking of the Jawa 4 power plant, the Cirebon expansion plant, the Cilacap expansion plant, the Jawa 7 and the Jawa 3 this year,” Iwan said on Thursday.

The power plant developments are part of the government’s program to supply an additional 35,000 MW of electricity within five years. 

As of December last year, PLN had agreed to purchase a total of 17,000 MW from independent power producers. Those agreements guarantee the producers that PLN would purchase the power and deliver it to customers. 

In the last two months, new power purchase agreements for around 2,000 MW have brought the total contracted electricity sales up to 19,827 MW. 

PLN aims to finalize power purchase agreements for 15,500 MW by the end of the year and the remaining capacity of almost 2,000 MW in 2017.

Following the power purchase agreement stage, 24 power producers with 5,329 MW of capacity are now closing financing before starting construction. Meanwhile, some other producers with 2,920 MW of capacity have entered the engineering, procurement and construction (EPC) stage.

Energy and Mineral Resources Minister Sudirman Said praised the progress of the government’s flagship program. 

“There are problems everywhere. However, PLN, the independent producers and local administration can solve them. We will also ensure that the power producers have funding in place,” Sudirman said.

To date, the country has a total installed power plant capacity of about 55,000 MW. The electrification ratio was at 88 percent as of the end of last year. However, there are numerous areas, particularly outside Java, with lower ratios and frequent blackouts as the demand is higher than the available capacity.

The 35,000 MW program is said to be necessary to support economic growth. In past years, similar programs failed, partly because of financing and problems in land acquisition for the would-be power plants. 

Earlier this week, the construction of the Batang power plant in Central Java gained new momentum after the Supreme Court ruled in favor of land acquisition for the project, which has been long delayed amid opposition from local people. 

Jarman, the Energy and Mineral Resources Ministry’s director general for electricity, said that the Supreme Court’s decision allowed for the land acquisition to be quickly concluded.

“As soon as the land [acquisition] is completed, financial closure can be reached,” he has said. 

The Batang project is being developed by PT Bhimasena Power Indonesia, a consortium consisting of Jakarta-listed PT Adaro Energy, J-Power Electric Power Development Co. Ltd. and Itochu Corp., which won the tender in 2011. The power plant is the first to be developed under a public-private-partnership scheme.