Regulatory Framework Seen as Essential for Smooth Implementation of 35,000 MW Mega Project

 
Marcell Sihombing, Kartini L. Makmur
 

The State Electricity Company. Photo by: SGP


27 October 2015 marks Indonesia’s National Electricity Day, which was commemorated for the first time in 1946. To mark the country’s 70th national electricity day, Sofyan Basir, President Director of Indonesia’s State Electricity Company (PLN), revealed some of PLN’s aspirations and plans for the future. First and foremost on Mr. Basir’s agenda is a successful illumination and electrification of his beloved homeland during the period of his tenure.
 
“It is our dream to bring light to all Indonesian citizens at a reasonable price as soon as possible. Now, let us join hands together in order to realize this dream,” enthused Mr. Basir in a statement made at PLN headquarters in Jakarta on National Electricity Day.
 
Many of Indonesia’s citizens have yet to be hooked up to the national grid, however Mr. Basir pointed out in his statement that the number of communities still without electricity has seen a significant reduction over the last few years. According to Basir, Indonesia’s electrification ratio has already reached 87% this year. This figure represents a full 20% increase over that posted five years ago.
 
“Within the next five years, demand for electricity across Indonesia is predicted to grow by approximately 8.7% per annum. Nevertheless, PLN is targeting a 95% electrification ratio by the end of 2019,” concluded Mr. Basir.
 
Mr. Basir believes that the above ratio target is in line with the 35,000 megawatt (MW) power-plant mega project inaugurated by the Widodo Administration. According to Basir, the establishment of such large-capacity power plants will be followed by the construction of 46,000 circuit kilometers (ckm) of transmission network, and Mr. Basir firmly believes that this project will help enormously as regards the realization of his electrification goals.
 
Mr. Basir admitted in his statement, however, that bringing such a huge mega project to completion would not be an easy task, and that the potential difficulties involved have been the subject of serious debate in the recent past. Basir remains optimistic though that the completion of the project can be successfully accomplished and that his optimism is grounded in solid fundamentals. In defence of his position, Mr. Basir points to the fact that potential obstacles that could hinder the first and second phases of construction have already been successfully identified, and the results are currently being analyzed in order to find the best solutions.
 
“All of the potential drawbacks and obstacles as regards previous programs were carefully assessed, and programs were improved as a result through the implementation of new regulatory frameworks. We are confident that this 35,000 MW project will pan out in a similar fashion,” asserted Mr. Basir.
 
Mr. Basir asserted that the government was already preparing a regulatory framework that would enable a large part of the procurement process relating to the construction of the 46,000 ckm electricity transmission network to be undertaken without the need for any tender mechanism. Moreover, the government is also formulating an inclusive framework that will involve domestic industries and middle businesses at the regional level. Through these frameworks, PLN, in its role of project leader, will have the authority to enter into contracts with producers and assemblers of transmission materials, as well as with contractors.
 
Now that the relevant regulatory frameworks have been formulated, all that remains is for Mr. Basir to wait for the government to legitimize them. In his statement, Mr. Basir also expressed his hope that clear and decisive regulations would prevent officials involved in the electrification project from engaging in any illegal graft and corruption.
 
Aside from his electrification ambitions, Mr. Basir also expressed his desire to lower electricity tariffs for the general public. However, he admitted that he does not wish to place a burden on the state budget, which is why he believes that subsidized electricity should only be enjoyed by Indonesia’s most underprivileged citizens.
 
“We will further evaluate how we can properly channel any subsidies, so that only citizens who are truly eligible for help with their electricity bills will be able to gain access to them,” concluded Mr. Basir.
 
Marcell Sihombing, Kartini L. Makmur
 

The State Electricity Company. Photo by: SGP


27 October 2015 marks Indonesia’s National Electricity Day, which was commemorated for the first time in 1946. To mark the country’s 70th national electricity day, Sofyan Basir, President Director of Indonesia’s State Electricity Company (PLN), revealed some of PLN’s aspirations and plans for the future. First and foremost on Mr. Basir’s agenda is a successful illumination and electrification of his beloved homeland during the period of his tenure.
 
“It is our dream to bring light to all Indonesian citizens at a reasonable price as soon as possible. Now, let us join hands together in order to realize this dream,” enthused Mr. Basir in a statement made at PLN headquarters in Jakarta on National Electricity Day.
 
Many of Indonesia’s citizens have yet to be hooked up to the national grid, however Mr. Basir pointed out in his statement that the number of communities still without electricity has seen a significant reduction over the last few years. According to Basir, Indonesia’s electrification ratio has already reached 87% this year. This figure represents a full 20% increase over that posted five years ago.
 
“Within the next five years, demand for electricity across Indonesia is predicted to grow by approximately 8.7% per annum. Nevertheless, PLN is targeting a 95% electrification ratio by the end of 2019,” concluded Mr. Basir.
 
Mr. Basir believes that the above ratio target is in line with the 35,000 megawatt (MW) power-plant mega project inaugurated by the Widodo Administration. According to Basir, the establishment of such large-capacity power plants will be followed by the construction of 46,000 circuit kilometers (ckm) of transmission network, and Mr. Basir firmly believes that this project will help enormously as regards the realization of his electrification goals.
 
Mr. Basir admitted in his statement, however, that bringing such a huge mega project to completion would not be an easy task, and that the potential difficulties involved have been the subject of serious debate in the recent past. Basir remains optimistic though that the completion of the project can be successfully accomplished and that his optimism is grounded in solid fundamentals. In defence of his position, Mr. Basir points to the fact that potential obstacles that could hinder the first and second phases of construction have already been successfully identified, and the results are currently being analyzed in order to find the best solutions.
 
“All of the potential drawbacks and obstacles as regards previous programs were carefully assessed, and programs were improved as a result through the implementation of new regulatory frameworks. We are confident that this 35,000 MW project will pan out in a similar fashion,” asserted Mr. Basir.
 
Mr. Basir asserted that the government was already preparing a regulatory framework that would enable a large part of the procurement process relating to the construction of the 46,000 ckm electricity transmission network to be undertaken without the need for any tender mechanism. Moreover, the government is also formulating an inclusive framework that will involve domestic industries and middle businesses at the regional level. Through these frameworks, PLN, in its role of project leader, will have the authority to enter into contracts with producers and assemblers of transmission materials, as well as with contractors.
 
Now that the relevant regulatory frameworks have been formulated, all that remains is for Mr. Basir to wait for the government to legitimize them. In his statement, Mr. Basir also expressed his hope that clear and decisive regulations would prevent officials involved in the electrification project from engaging in any illegal graft and corruption.
 
Aside from his electrification ambitions, Mr. Basir also expressed his desire to lower electricity tariffs for the general public. However, he admitted that he does not wish to place a burden on the state budget, which is why he believes that subsidized electricity should only be enjoyed by Indonesia’s most underprivileged citizens.
 
“We will further evaluate how we can properly channel any subsidies, so that only citizens who are truly eligible for help with their electricity bills will be able to gain access to them,” concluded Mr. Basir.
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