Friday, November 03, 2006

10,000 MW Transmission headache for PLN

The ambitious and looks-good 10,000 MW power generating project would likely worsen further state-owned electricity PT PLN's long-term financial capability as the company is yet to anticipate the transmission and distribution parts.

It took 15 years for PLN to build transmission & distribution network for 10,000 MW. Even for the best case scenario, it would take a decade or so to absorb the additional 10,000 MW. The problem, if all of these projects would be accomplished as scheduled (before 2010), PLN is tied to pay no matter PLN actually takes the power produced or not.
Even a three-year time-lag would cost PLN a lot. For power investors, as long as they have the take-or-pay clause with PLN, they would be secured. "That's gonna be a mess for PLN," one internal source at the company said.
By law, only PLN is allowed to operate transmission and distribution of electricity in the country. "I just can't understand why nobody cares about transmission. This is a huge challenge, more difficult to implement than build up 10,000 MW of power generating units. Sometimes you need more than two years only to accomplish land acquisitions. Not to mention the environmental and social struggles along the way," said one observer.
Even at PLN, there are several projects heavily delayed even though the funding is available already
He sensed massive rent-seeking in the 10,000 MW for political purpose, especially the 2009 presidential election. "The fees could go up to hundreds of million dollars," he said.

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Anonymous Anonymous said...

"by law" is a good excuse to answer the observer question of "why nobody cares about transmission".

This is why many (not saying all) foreign investors are VERY VERY careful of investing in Indonesia, plus there are some other places such China and India also interesting.

Can't wait when all parties are hand in hand in doing just one thing called infrastructure. By doing things like today (read: uncertainties of regulations, monopoly), I guess Indonesians are ready to do it without foreign investor (is it true?).

November 06, 2006 10:03 AM  

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