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Indonesian private firms eyeing opportunity for the power business

Given the government’s grand plan to build up power plants at mega capacity of 20,000 megawatt (MW) in two phases until 2018, Indonesian energy providers are keen to see it as lucrative business as they already had captive market and resources to fuel their business.

Embracing private power provider firms, the Indonesian government has set ambitious plans to build new power plants in two phases, with 10,000 MW of total capacity drafted for each phase. All of those efforts were aimed at complying with power needs growth at home for households and industrial purposes across the country, estimated to have reached 20 percent per year.

The first phase of massive power plant projects, started in 2009, was dominated by construction of coal-fired power plants across the country. A senior official at Indonesia’s power utility firm PLN said that as of the middle of this year, 45 percent of the first phase projects or an equivalent to 4,450 MW, had been accomplished and a total of 10,000 MW is expected to fully operate in 2015.

The construction of coal-fired power plants are expected to reduce the operation of costly fuel-fired power plants ran by PLN. PLN expected the operation of fuel-fired power plant would account for 1 percent of overall power plants running in the country by 2015.

Currently, the total capacity of power plants operating in Indonesia stood at around 32,000 MW.

The second phase of the mega power plant projects would be dominated by those fired by renewable resources consisting of hydropower and geothermal power. PLN has established cooperation ties with domestic and foreign investors to explore sites considered potential to construct such power plants at. Indonesia has plenty of rivers and geothermal deposits for the projects.

Learning on such a condition, Eksploitasi Energi Indonesia, a domestic private energy provider firm, is keen to grab business opportunity in providing power to fulfill the country’s increasing demand for power.

“This is a lucrative business that worth to be explored at. It only takes technology and capital to run the business as we already have the market. No need to take marketing efforts as PLN would buy all of our power production to supply its power grid,” Henry Sitanggang, the firm’s president director said here on Tuesday.

Besides acting as the regulator in power business, PLN is authorized by the government as the buyer of electricity produced by private power providers operating in the country on contract basis.

He said that Indonesia is one of the world’s largest coal depositors, with more than 5 billion tons of coal deposit according to the 2005 data, which will assure the operation of coal-fired power plants for quite a long time.

“All we have to do is securing the coal supply to our power plants,” he said, adding that the next thing to do is to expand the business by constructing more power plants and acquiring other plants.

He said that his firm has initiated construction of micro hydropower stations in West Java, West Sumatra and Sulawesi to address its expansion plans. Besides that, the firm had also drafted plans to build large capacity of coal-fired power plants in South Sumatra.

He said that the need to provide more electricity is even more imminent as many foreign investors have made commitments to increase their existing plants or starting business in Indonesia.

Indonesia, the largest economy in Southeast Asia, has earned investment grade from two credible foreign rating firms early this year for the country’s excellent economic performance. The consistent high growth gained by Indonesia in the last few years amid crisis that rammed the global economy has also attracted foreign firms to expand investment in the country.

The Indonesian government has targeted at a 6.5 percent growth this year, which is possible to reach 6.8 percent next year along with the recovery in global economy.

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