Indonesia to resume shelved power projects

Feb 06, 2002 01:00 AM

In response to a looming power crisis, the Indonesian government has decided to resume development of several power generating projects that were shelved in 1997 during the financial crisis. Luluk Sumiarso, the director general for electricity and energy utilization, said development of the projects, some of them are mired in litigation, is necessary to head off electricity crisis.

Luluk said Indonesia is feared to suffer severe shortage of power supply in 2004 unless new power generating plants are operational by that year. "We could prevent electricity crisis if the projects are developed," Luluk told. He said the national power utility company PLN already renegotiated old contracts with private companies. "A number of long term agreements have even been signed," he added.
The government demanded renegotiations of old contracts as the contracts were allegedly tarnished with corruption and collusion. Under dollars based power purchase agreement (PPA), PLN is to buy power from independent power producers at a price much higher than its selling prices to the public. With the rupiah fall the purchase prices became much higher.

The PPA was based on the cost of the power generating projects which were suspected of big mark-up involving the investors and government officials under the old regime. However, as Chief Economics Minister Dorodjatun Kuntjoro Jakti said it was difficult to prove corruption in the projects and there is little chance the government will win any case if the disputes were to be brought to court.
"I am angry if I look behind, but if we look ahead we will see the terrible crisis we are facing," Dorodjatun said. "The government, therefore, aware of the crisis in 2004, has to be more flexible in seeking to settle the dispute," he added.

Source: Asia Pulse
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