Thus, with the countrys current capacity of 54 thousand megawatts, the completion of the development of power plants, with a targeted capacity of 35 thousand megawatts, will bring the countrys total electricity generation capacity to 89 thousand megawatts by the end of President Joko Widodo (Jokowi) governments term in 2019.
President Jokowi has therefore reminded the state-owned electricity firm PLN about the target to build power plants. He called for the accelerated construction of power plants in a bid to meet the electricity needs of the people and domestic industries.
"The target given to PLN was not small. Therefore, it should work (towards the end) as fast as possible," President Jokowi remarked during his visit to the PLN headquarters in South Jakarta on Tuesday.
The president pointed out that Indonesias electricity requirement is huge, primarily to help the industries that need a considerable amount of power.
According to Vice President Jusuf Kalla, the government does not have sufficient funds to develop the countrys power plant projects. Therefore, the private sector is expected to take part in the projects.
The government can only develop some 30 to 40 percent of the projects and the remaining are expected to be built by private companies, which will act as independent power producers (IPP).
This year, the government has set a target to develop 11 thousand megawatts, and in 2016, it expects to have completed the second phase of generating 10 thousand megawatts.
With regard to reaching the target of 11 thousand megawatts in 2015, President Jokowi expressed confidence that it could be achieved. He also admitted that he was aware of the on-field constraints but was certain that they could be overcome.
The target of 10 thousand megawatts was set for 2016 as part of the efforts to achieve the target of 35 thousand megawatts during the next five years.
"If the targets of 11 thousand megawatts and 10 thousand megawatts for this year and the next, respectively, are achieved, then it can be said that the target of 35 thousand megawatts is already in sight," the president remarked.
Jokowi further noted that the efforts to achieve the target of generating 35 thousand megawatts was set to meet the needs of a large number of industries, such as hotel industries that depend on power supply to support the development of the tourism sector.
As several regions in the country still face power shortages, the head of state affirmed that the government will continue to work hard to achieve the target.
Therefore, Vice President Jusuf Kalla has also recommended that state-owned electricity company PLN should expedite the construction of power plants, with a total additional capacity of 35 thousand megawatts, through the Independent Power Producer (IPP) mechanism, which involves private players.
"PLN can provide only some Rp400 to Rp500 trillion (about US$30.4 to US$38 billion) to construct the plants. We need more private players to make electricity widely available," Kalla noted.
With that amount of funding, PLN is expected to construct a power plant with a capacity of 10 thousand megawatts, while the responsibility of constructing a section to generate 25 thousand megawatts will be given to the private sector through the IPP mechanism.
The construction of power plants to generate an additional 35 thousand megawatts of electricity is needed to support the economic growth target of 6.5 percent per year.
Kalla also highlighted the importance of having adequate power reserves. He stated that the national electricity reserve should be 30 percent of the existing capacity, taking into account the countrys growth of population and economy.
"Our ideal electricity reserve should be 30 percent. We now have 54 thousand megawatts. So, we must have at least 15 thousand megawatts as reserve to prevent power outages," he explained.
The current availability of electricity reserve is only 10 percent, which results in power outages in several areas.
For the development of 11 thousand megawatts this year, 12 foreign companies have submitted investment applications worth US$8.94 billion with the Capital Investment Coordinating Board (BKPM).
"In the period between January and March 2015, we received applications for principle licenses on foreign investment (PMA) from 12 companies with a total value of US$8.94 billion," Deputy Chief of Capital Investment Planning Affairs of the BKPM, Tamba Hutapea, stated on Tuesday.
Of the 12 companies that filed investment applications, three with investment worth US$1 billion were from Japan; one with investment worth US$6.26 billion was from China; one with investment worth US$211.6 million was from a Seychelles-based company; five with investment worth US$444 million were from Singapore; and two worth US$1.02 billion were from companies jointly owned by several countries.
The locations of the electricity projects are scattered across various provinces, such as Aceh, Banten, West Java, East Java, East Kalimantan, Lampung, Maluku, South Sulawesi, North Sulawesi, and North Sumatra.
"There are 15 locations because two of the 12 companies filed for more than one location," Hutapea explained.
In order to accelerate the development of power projects, state-owned power utility PLN will call for tenders for the procurement of liquefied natural gas (LNG) that would expedite the development of plants with a total generation capacity of 35 thousand megawatts.
PLNs Director for the Procurement of Strategic and Primary Energy Affairs Amin Subekti noted that his company not only called for a tender for the construction of power plants but also for the procurement of gas supply for generators.
"The tenders for the development of power plants and the procurement of gas are held separately. We have to do everything in our capacity to achieve the target of generating additional 35 thousand megawatts of power," Subekti noted.
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