PLN warns of acute power shortage outside Java

Indonesia's national power company Perusahaan Listrik Negara has warned that 24 critical systems outside the Java-Bali grid in 2002 will experience power shortages because of insufficient funds. PLN Finance Director Parno Isworo said the state-owned utility doesn't have the financial ability to build new generating units to match the country's power demand growth.
PLN expects to hook up 1.3 mm new customers in 2002, still 50 % short of the 2.6 mm new annual connections achieved before the Asian crisis, Parno said. PLN has about 29 mm customers in the archipelagic country with a population of 220 mm, Parno Isworo said. Using the statistics as a guide, PLN is servicing 60 % of Indonesia, leaving the rest with no access to electricity, he added.
"The demand pressure is great, but we cannot connect more customers because we have no money," Parno Isworo said. The power demand shortage is especially acute in 24 grid systems identified. They include South Sumatra, West Timor, East and West Nusa Tenggara and Potianak, West Kalimantan. The power generation capacities in these areas are insufficient to meet local demand because of a lack of fresh investment, he said.

PLN has no choice but to "curtail" the electricity supply in these areas, said Parno Isworo. PLN will resort to power rationing particularly during peak load periods. There are few short-term solutions to resolve power shortfalls in areas outside the densely populated Java-Bali grid. But in South Sumatra, plans are underway to revive the construction of a 200-MW steam-powered power plant. However, there will be frequent blackouts in the short term because the plant isn't expected to be completed until 2005.
Within the Java-Bali power grid, PLN faces the challenge of finalizing by December long-term power purchasing agreements at rates it can afford to pay. The two most contentious PPAs under negotiation are linked to independent power producers -- PT Paiton Energy and PT Jawa Power -- as both are scheduled to start making capital loan repayments in 2002, and are thus seeking rates that they consider fair, and PLN considers "too high." The two IPPs have a combined generating capacity of 2,450 MW.

Both have interim PPAs with PLN at rates which both companies said are only sufficient to cover operating costs, but fall short of covering loan repayments and shareholder dividends. The shareholders of Paiton Energy, operator of Paiton-I, are Edison Mission Energy, a unit of Edison International ; General Electric Capital, a financing arm of General Electri; Japan's Mitsui & Co. and a local partner, PT BHP. The operator of Paiton-II, Jawa Power, is 50 %-owned by Germany's Siemens Power, 35 % by the UK's PowerGen, and 15 % by local company PT Bumipertiwi Tatapradipta.