PLN geothermal projects to be transferred to private firms

Alfian , The Jakarta Post, Jakarta | Thu, 03/11/2010 9:00 AM

About six geothermal power plant projects, which were supposed to be built by PT PLN under the second 10,000 megawatts (MW) electricity crash program, will be transferred to private power producers (IPPs) as the state power company faces difficulties in securing financing for the projects, an official said.

The energy and mineral resources ministry’s decree No. 2/2010 on the list of the power plants included in the 10,000 MW power project designated PLN to construct 11 geothermal power plants with a total capacity of 880 MW.

“But, we will revise the decree, because there are about six geothermal projects that will be transferred to private companies,” J. Purwono, the Energy and Mineral Resources Ministry’s director general for electricity and energy use said Wednesday.

Purwono refused to mention the projects planned to be transferred, saying the government was still waiting for a formal written request from PLN.

Meanwhile PLN president director Dahlan Iskan said that the state electricity utility withdrew from the three projects due to protests from the East Java provincial administration. According to him, the provincial government claimed that it was their right to choose the investors in the projects, not the ministry. In an earlier presentation from the ministry, there are three PLN geothermal power projects that were still looking for financing commitments. The power plants are the 110 MW Ijen Power Plant; the 55 MW Iyang Argopuro Power Plant, and the 165 MW Wilis Power Plant — all of them are located in East Java.

The Ijen Power Plant requires investment up to US$165 million, while the Iyang Argopuro and the Wilis power plants require investments of up to $83 million and $259 million, respectively.

Suryadarma, chairman of the Indonesian Geothermal Association (API), said the decree was inaccurate and not in line with the 2003 Geothermal Law. “The law states that the companies winning the geothermal working area tenders can develop the resource from the upstream to the downstream, meaning that they can build the power plants. But, the decree has forced them to sell the steam to PLN’s power plants,” Suryadarma said.

He added that the decree had hampered the geothermal working area tenders conducted by several regional governments. “Several tenders have been opened, but now the regional government are confused because the decree has limited that the downstream side of the business will be given automatically to PLN,” Suryadarma said. He added the projects that have been put up for tender are the Ijen and the Wilis power plants.

A geothermal power plant requires investment of as much as $3 million per megawatt. Suryadarma said the geothermal exploitation and the construction of the geothermal power plants would take about five years. “If the working areas can secure investors this year, the power plants can be finished between 2014 and 2015,” Suryadarma said.

The second 10,000 MW project was originally expected to be completed by the end of 2014.