Failed to Fulfill Local Content of PLN Project Rp 51.5 Trillion Stalled

POWER PLANT PROJECT - JAKARTA. Several PT PLN projects worth IDR 51.5 trillion, which are funded from abroad, are hindered by the policy of domestic content level (TKDN). The majority of these projects should already be commercially operational or entering the commercial operation date (COD) by 2026. 

The Executive Vice President of Renewable Energy PT PLN, Zainal Arifin, explained that the Engineering, procurement and construction (EPC) PLN project is hindered by one significant obstacle, namely the TKDN clause issue. 

“This TKDN clause cannot be accommodated in the procurement guideline of the development banks, so the funding for this project is hindered,” he told Kontan.co.id, Wednesday (24/1). 

He stated that one of the obstacles is that the Ministry of Industry does not want to relax the TKDN rules for foreign financing, even if it is an EBT project. 

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The reason TKDN hinders funding from abroad, in the context of the World Bank alone, continued Zainal, is that the consensus of all World Bank members cannot provide a local content reference because the funding comes from many countries. 

This TKDN rule is regulated in the Minister of Industry Regulation No. 54 of 2012 which was then changed to the Minister of Industry Regulation No. 4 of 2017 where there are 6 TKDN thresholds in the electricity project. Each power plant specifies its TKDN requirements. 

He hopes that there will be a revision related to TKDN specifically for projects that are funded from abroad. 

Here are the foreign-funded projects that are hindered by TKDN. 

1. Upper Cisokan PS Hydroelectric Power Plant with a capacity of 1,040 MW. The project value is US$ 755 million or equivalent to IDR 11.70 trillion with a loan percentage of 80%. The target COD is in 2025/2026 
2. Matenggeng PS Solar Power Plant with a capacity of 943 MW. The project value is US$ 1.18 billion or equivalent to IDR 18.33 trillion with a loan percentage of 70%. The target COD is in 2028. 
3. Bakaru II Solar Power Plant with a capacity of 140 MW. The project value is 241.2 million EUR or equivalent to IDR 4.1 trillion with a loan percentage of 77% and the target COD is in 2025/2026
4. Rehabilitation of Kamojang Geothermal Power Plant with a capacity of 140 MW. The project value is 78.7 million EUR or equivalent to IDR 1.33 trillion with a loan percentage of 76% and the target COD is in 2026. 
5. Ulumbu 5 and Mataloko 2-3 Geothermal Power Plants with a capacity of 20 MW. The project value is 217 million EUR or equivalent to IDR 3.68 trillion with a loan percentage of 69% and the target COD is in 2025/2026. 
6. Hydro PLTM Spread (Kalibumi, Lapai I, Riorita, Watunohu) with a capacity of 32.58 MW. The project value is 94.6 million EUR or equivalent to IDR 1.6 trillion with a loan percentage of 73% and the target COD is in 2025/2026. 
7. Hululais Geothermal Power Plant with a capacity of 110 MW. The project value is US$ 207.99 million or equivalent to IDR 3.2 trillion with a loan percentage of 85% and the target COD is in 2025/2026. 
8. Green Energy Corridor Sulawesi 275 JV Transmission with a length of 830 kms. The project value is US$ 484 million or equivalent to IDR 7.5 trillion with a loan percentage of 67%. The target COD is in 2027.