The Energy and Mineral Resources (EMR) Ministry and state electricity company PLN will attempt to accelerate the 35,000 megawatt (MW) or 35 gigawatt (GW) mega power project. PLN aims tender and sign power purchase agreements (PPA) for more than 8GW by the end of the year.
The signing of 4 GW PPA from PLN is also expected to be completed this year. Coupled with the PPA that has already been signed, this could bring this year’s total to 30 GW.
PLN’s Procurement Director Supangkat Iwan Santoso said that the remaining 5 GW could also be completed this year. “Because it [the capacity of the power plants] is small, they can be completed quickly,” Supangkat said on Tuesday (23/8).
(Read: PLN Opens Tender for Four Projects in the 35 GW Power Plant Project)
To attempt to accelerate the 35 GW power project, PLN has also coordinated with the government. PLN CEO Sofyan Basir said that there have been several breakthroughs in accelerating the completion of the mega power project. These have been discussed at a coordination meeting with Acting Energy and Mineral Resources Minister Luhut Binsar Panjaitan.
First, independent power producers (IPP) are now allowed to cash in collateral deposited with PLN of up to 10 percent of the total investment value. Previously, these funds would revert to PLN if the IPP failed to complete a power project. These collateral funds will be used for the project ground-breaking or foundation stone laying, even if the project not reached the stage of financial closing.
Second, PLN will accelerate the tender process. A tender that normally takes 14 months to complete plus a year for financial assurance, will be shortened to just seven or eight months plus six months for financial assurance.
The third breakthrough is that the government will accelerate the land procurement process by coordinating with respective ministries and regional governments. Fourth, PLN’s electricity transmission project will be developed using company funds and loans from local banks. (Read: Government Disburses IDR 10.5 Trillion for PLN)
Luhut said that the 35 GW mega project could be completed by 2019, as instructed by President Joko Widodo. However, Luhut said that by that time, only 20 GW of the total 35 GW will be available for commercial use. “The remaining 10 GW will still be in construction completion stage,” Luhut said at the Energy and Mineral Resources Ministry offices on Wednesday (24/8).