Govt to push local content for power plant project

JAKARTA. In a bid to increase power supply, the government is to source components needed for the construction of 35,000-megawatt (MW) power plants from domestic manufacturers.

Coordinating Maritime Affairs Minister Indroyono Soesilo said the move would support the domestic manufacturing industry.

The minister said that local engineering and procurement companies (EPCs) had been given the green light to participate in the projects, whose investment was expected to reach more than Rp 1 quadrillion (US$79 billion).

“In an effort to increase local content, we have agreed to support the national industry as much as possible,” Indroyono said on Thursday.

He added that the government would issue a regulation enabling the formation of a technical team to aid EPCs and independent power producers (IPPs) in the construction of power plants to meet the 35,000-MW target by 2019.

The minister said the government would impose a 40-percent minimum for local content on certain power plants in accordance with regulations.

Industry Minister Regulation No. 54/2012 on local content use for electricity infrastructure stipulates that, for instance, power plants under 35 MW will have to maintain a local content of 60 to 70 percent, and 30 percent for generators over 100 MW.

According to Indroyono, state-owned electricity company PT PLN will supply 10,000 MW of the 35,000 MW targeted output. The company will also be in charge of coordinating IIPs to supply the remaining electricity quota.

PLN director of affiliation planning and management, Murtaqi Syamsuddin, meanwhile, said his office was preparing a total capital expenditure (capex) of Rp 50 trillion to construct the firm’s share of the deal, although he predicted total expenses would rise beyond the Rp 1 quadrillion mark.

He also predicted that PLN would annually construct 2,000-MW equivalent in power plants until 2019.

Regarding output from the IPPs, Murtaqi said there would be at least 7,800 MW of electricity infrastructure built this year, with several projects already underway, such as South Sumatra 8, 9, 10 and Java 4, 5 and 7.

About 50 percent of all output would be generated by coal-fueled power plants, with the remainder supplied by water power, geothermal energy and natural gas, he added.

Murtaqi said that he would ask the government to inject more capital into the project, but also revealed that several international bigwigs had made enquiries.

“Capital-heavy investors will be involved in building power plants exceeding 300 MW. Such is the case with the Lontar plant, which has managed to attract big-hitters such as Sumitomo, Marubeni and Mitsui,” he said.

At the end of last year, the Coordinating Maritime Affairs Ministry unveiled a masterplan that would help Indonesia regain its status as a maritime power, an objective that President Joko “Jokowi” Widodo emphasized early on in his term.

One of the masterplan’s main objectives was to generate an additional 35,000 MW of electric power by 2019, using Rp 400 trillion of state funds. (Tama Salim)