PLN to fully control electricity infrastructures

JAKARTA. The government has provided another incentive for PLN (the State Owned Electricity Company) to realize the mega electricity project with the capacities of 35,000 megawatts (MW).

Recently, the government has released Presidential Regulation No 14/2017, which revised the Presidential Regulation No 4/2016 on the Acceleration of Electricity Infrastructure Development. The new presidential regulation sets some points related to the scope of PLN’s involvements in the electricity infrastructure development.

First, the government has expanded the scope of self-management electricity infrastructure development from only the developments of power plant and transmission to the distribution activity, as well as the establishments of substations and other supporting facilities.

Second, the government grants taxation incentives and facilities to PLN related to the development of electricity infrastructure. The government also has granted incentive in terms of land provision for electricity projects to PLN. Therefore, PLN may want to utilize some plots of lands for the infrastructure developments related to electricity projects, such as for developing roads, railroads, and pipe lines.

Third, in order to ensure the electricity provisions, the agreement between PLN with the power plant developer (PPL) should be made under buy-sell transaction agreement, instead of rental agreement. Fourth, PLN may have a major portion in the partnerships of electricity development with domestic and foreign companies or business entities.

Chief of Communication, Information Services, and Cooperation Bureau at the Ministry of Energy and Mineral Resources (ESDM) Sujatmiko said, the revision will bring more supports to PLN to work on the electricity infrastructure projects. “This will support PLN in developing the distribution networks, substations, and the supporting facilities,” he told KONTAN, Monday (27/2).

The new presidential regulation will allow PLN to control the electricity project. The revision requires a major portion for PLN in any cooperation with private company. Let alone, the Constitutional Court Verdict on 14 December 2016 has also confirmed the monopoly and monopsony of PLN in electricity affairs.

In this case, PLN is the sole party, which is eligible to sell electricity to consumers, as well as to purchase electricity from privates.

Chief of Corporate Communication Unit of PLN I Made Suprateka hopes, the new regulation will allow PLN to accelerate the completion of 35,000 MW electricity project. “We are also ready to adjust the purchasing contracts with the privates,” he said.

However, the Chief Executive of Indonesian Private Electricity Producers Association Arthur Simatupang said that PLN has some limitations, mainly in terms of financial to accelerate the electricity developments.

Some regions are still experiencing deficit in electricity. Under the new regulation, the electricity provision will rely much on PLN’s response in providing distribution facilities.

(Muhammad Farid/Translator)