Govt may exempt power projects from tendering

Ika Krismantari, The Jakarta Post, Jakarta

The government is considering exempting a number of planned power plant projects from lengthy tender processes by applying the much faster direct appointment mechanism instead.

Energy and Mineral Resources Minister Purnomo Yusgiantoro said during a seminar on power-plant procurement mechanisms Thursday that direct appointment would be one way of ensuring a speedy solution to the country's electricity crises.

At present, some 60 percent of the population has access to electricity, but many parts of the country, including large swathes of North Sumatra, Nangroe Aceh Darussalam, Riau and Central Sulawesi, have yet to benefit from electrification.

"It is hoped that Indonesia will achieve an electrification level of almost 100 percent by 2015," Purnomo added, while stressing the importance of private sector involvement in the power plant projects due to the budgetary constraints facing the state.

To respond to the power crisis, the government initiated the 10,000-megawatt (MW) crash program, which encourages private investors to tender for the deliver of additional power supply of 6,900 MW in Java and Bali, and 3,100 MW outside of Java by 2009.

Based on a 2003 presidential decree, direct appointment is permissible in the case of projects worth less than Rp 50 million (US$5,434), and emergency projects that need to be delivered swiftly.

During the seminar, Director General for Electricity and Energy Usage J. Purwono said the crash program should be categorized as an emergency as the projects were essential to resolving the power crises in many parts of the country.

"Direct appointment would also be permissible in the case of power projects using renewable energy, gas from marginal fields, and other forms of local energy supplies, as well as mine-mouth power plants," Purwono said, citing another government regulation.

He said that investors that were interested in these kinds of power projects could directly submit their proposals to state-owned electricity utility PLN, which would then consult with the government.

"Capacity will depend on the area's needs and the price can be further negotiated with the government," Purwono explained.

PLN power generation director Ali Herman Ibrahim said that direct appointment would speed up the process of selecting private operators and would help the company meet the country's rising demand for electricity

In his presentation, Herman explained that a tender process took almost 395 days, or almost 13 months, from start to finish, while a direct appointment only took about 121 days, or three months.

Currently, PLN has a total installed capacity of 24,417 MW, or 85.5 percent of the total national power generating capacity. The remainder is accounted for by independent power producers (3,450 MW), and privately owned power plants supplying major industrial undertakings (746 MW).

After the seminar, Herman said that PLN was planning to sign agreements in April with a number of investors to upgrade the Muara Karang gas-fired power plant in North Jakarta and the Muara Tawar gas-fired plant in Bekasi.

A total of three interested investors -- Japan-based Marubeni, France-based Alstom, and a consortium made up of Fuji, Samsung and Mitsubishi -- have submitted bids for the Muara Tawar project, while two Japanese investors -- Mitsui and Mitsubishi -- have submitted bids for the Muara Karang project, he said.

Both plants, currently operating at 720-MW capacity, will have their capacities increased by 300 MW each.
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