ASEAN KEY DESTINATIONS
Indonesia braces for defeat in 35 GW program
The government is in “dire need of a miracle” to realize its ambitious goal to generate an additional 35,000 megawatts (MW) of electricity by 2019 in the country, on the back of a sobering projection revealing that the target would most likely be missed.
The National Energy Board (DEN) announced on Monday that only 56.28 percent of the target, about 19,700 MW of electricity, would be added into the grid by 2019. The estimate was based on the actual development contracts that state-owned electricity firm PLN would close by the end of this year.
Furthermore, the lower-than-expected economic growth in the past two years has also raised questions about the feasibility of the program. President Joko “Jokowi” Widodo said during his campaign he would aim for 7 percent economic growth next year, but the 2017 state budget draft conservatively set the rate at 5.1 percent.
Presidential spokesman Johan Budi acknowledged that Jokowi was made aware of the projected shortfall in the electricity generating target during a closed-door meeting held at the beginning of the month.
“This was based on an evaluation that says [the 19,700 MW outcome] is likely to be real. We cannot force the 35,000 MW program. However, this does not mean the target has changed,” he told The Jakarta Post on Wednesday.
DEN member Rinaldy Dalimi said that unless PLN could expedite the financial closure, it was unlikely that any more than 19,700 MW would be achieved as it took around 36 months to build a power plant after the financial issues were settled.
According to Rinaldy, PLN had yet to submit the location of about 30 power plants to the Agrarian and Spatial Planning Ministry. While most of the remaining capacity of the 35,000 MW program would probably be completed by 2022, DEN deemed some power plants would be impossible to build on time because of land acquisition problems.
But even so, DEN said it believes it is unlikely that Indonesia would experience a power crisis based on the assumption of a 6 percent economic growth in the upcoming years.
Meanwhile, Institute of Essential Services Reform (IESR) executive director Fabby Tumiwa said it was crucial for the government to reevaluate its target as the total 35,000 MW would be unnecessary if Indonesia’s economy only continues to grow at an average 5 percent per year.
“They need to recalculate a realistic demand in [PLN’s] electricity procurement business plan [RUPTL] for 2017 to 2026,” he said, adding that targets in the RUPTL had never been fulfilled since its conception.
Although PLN could not be reached for comment, the company’s data as of September showed that only 232 MW of the total 35,000 MW target are in commercial operation.
The megaproject is basically a continuation of the 10,000 MW policy launched by then president Susilo Bambang Yudhoyono in 2005, to keep the reserve margin — the difference between the existing capacity and the peak demand — within the International Energy Agency’s recommended level of 20 to 35 percent.
As the nation was at risk of a power crisis should the reserve margin decline to below 20 percent, Jokowi had taken the initiative during his first days in office in 2014 to boost power capacity to accommodate his 7 percent growth target.
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