Indonesia power chief to build plants outside Java

Reuters, by Muklis Ali, Wed Dec 23, 2009 5:02pm IST

JAKARTA, Dec 23 (Reuters) - Indonesia's state electricity firm plans to build new power plants outside Java island with a combined capacity of around 2,000 megawatts to resolve chronic power shortages, the firm's newly appointed head said on Wednesday.

Dahlan Iskan, a 58-year-old media tycoon who also operates a small power plant in East Kalimantan, replaces Fahmi Mochtar as president director of PT Perusahaan Listrik Negara (PLN) after criticism over power shortages in the capital and other areas.

PLN operates around 25,000 MW of electricity, but most of its plants are old, so daily output is far below capacity.

"We plan to boost electricity generation outside Java, because they have already had shortages for years," Iskan told reporters after a ceremony to mark his appointment.

He said that the new small-scale coal-fired power stations with a combined capacity of around 2,000 MW would be built in areas such as Kalimantan and Sulawesi.

The administration of President Susilo Bambang Yudhoyono had put pressure on Mochtar, who was appointed in March last year, to increase power capacity after frequent blackouts across much of the archipelago.

Local media has been reporting for some time that Mochtar would go and Indonesia's state enterprises minister Mustafa Abubakar said the replacement of the president and other directors at PLN was aimed at refreshing management.

"We evaluated the board of directors of PLN and as a result we decided we needed new management to develop the company further," Abubakar said.

Yudhoyono has previously criticised PLN management for failing to respond to pressure from the regions to build new power plants.

The government has launched two crash programmes to increase power generation because Southeast Asia's biggest economy faces chronic power shortages after years of under investment.

The first crash programme aims to add 10,000 MW of coal-fired power stations to meet electricity demand that officials say is growing at around 10 percent a year.

The second phase, due to start next year, aims to tap more alternative sources of energy such as geothermal to meet rising power demand and cut consumption of expensive crude oil as reserves dwindle.

PLN plan to tender for power projects worth $2.3 billion next year under the second phase of the 10,000 MW programme with nearly half, or 4,733 MW, due to come from geothermal.

(Editing by Ed Davies)