ASEAN KEY DESTINATIONS
New power projects in pipeline
Indonesia:Two months after a one-stop service policy was implemented, a number of licenses for electricity businesses have been issued and the projects are expected to be able to support the government’s ambitious program of boosting the country’s power capacity.
At least seven permanent business permits and 14 temporary business permits have been issued for electricity procurement since the beginning of the year, an official said Thursday.
“There is interest from 39 domestic and international companies with planned projects to generate a total of 8,000 megawatts (MW) of electricity. The permanent and temporary permits that have been issued cover around 2,000 MW,” said Ronggo Kuncahyo, a coordinator for the electricity sector at the Investment Coordinating Board (BKPM).
Ronggo added that most of the potential investors were interested in developing mine-mouth coal-fired power plants, regular coal-fired power plants and hydro power plants, as well as micro-hydro and mini-hydro power plants.
“There is interest in the electricity business as long as we ease the process, including on the permission process and land acquisition issues,” Ronggo said, adding that the electricity office was one of the sections that had the most visitors in the last two months.
Apart from the issuance of the permanent and temporary business permits for electricity procurement, four permits for electricity business support, a determination of working areas for electricity procurement and 34 certificates for registered geothermal businesses have also been issued.
The licensing process for the electricity sector had been transferred from the Energy and Mineral Resources Ministry to the BKPM in the middle of January as part of the government’s strategy to cut the processes required in obtaining permits to do business in Indonesia. Red tape has become a nagging issue hampering the realization of investment projects in past decades. At present, several officials from the Energy and Mineral Resources Ministry have been assigned to the BKPM to be in charge of handling the issuance of permits for power-related projects.
Under the BKPM-led initiative, the government is aiming to cut the number of permits needed by investors from 52 to 18.
It also expects to shorten the process of getting a license in the power sector from 923 days to a maximum of 393.
The Energy and Mineral Resources Ministry’s director general for electricity, Jarman, said the government is even aiming for the higher target of cutting the timeline to 120 days or even 90 days, in the hopes that such efforts would attract investors to develop electricity projects in the country and in turn help meet the government’s target of having an additional generation capacity of 35,000 MW within five years.
The government expects private investors to contribute to the development of the plants to produce the bigger chunk of 25,000 MW, leaving the remaining 10,000 MW to state-owned PT Perusahaan Listrik Negara (PLN), which is operating under financial constraint.
“We are expecting that a half of the remaining 25,000 MW will come from expansion projects to be conducted by 23 private players. Based on experience, if the project is an expansion project, the success ratio is 100 percent because problems in land acquisition and financing are unlikely,” Jarman said.
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