Power outages in almost all areas are caused by a power shortage. If special attention is not paid to this and no extraordinary breakthroughs are made, we could have a power crisis within the next three to four years. This would fail to support people's activities, decrease industrial competitiveness and slow down economic growth. A limited power supply, which leads to an inability to meet growing needs, is caused by the lack of power plant development of 6.5% compared to the 8.5% growth in electricity demand over the last five years. The lack of development is caused by various issues, such as problems with land acquisition, regulations, licenses, funding and electricity price negotiations between PLN and private companies. Currently, total national installed capacity is 50,000MW produced by power plants built by PLN and private companies since PLN’s establishment. With an economic growth projection of 6-7% per year, within five years we will need an addition power production of 35,000MW or 7,000MW per year.
Therefore, the government has no option but to increase power capacity by 35,000MW. This electrification program is a strategic national program as stated in the National Mid-Term Development Plan 2015-2019. The program of 35,000MW production will require huge investment amounting to more than Rp 1.100 trillion. In order to maintain financial capability, PLN will build power plants to produce 10,000 MW. The remaining 25,000MW will be offered to Independent Power Producers. The government has issued and implemented new regulations to realize the program.
These regulations are: Law No. 2/2012 on land acquisition for public interests, Presidential Decree No. 30/2015 (on amending Presidential Decree No. 71/2012 on land acquisition for public interests), Ministerial Decree No. 3/2015 (on electricity purchase procedures) and Ministerial Decision ESDM 74K/21/MEM/2015 (on the legalization of the 2015-2024 business plan on developing power plants). Considering that the 35,000 MW program is highly strategic, support is therefore required from all stakeholders.
PROJECTION OF ELECTRICITY NEEDS [...]
DISTRIBUTION OF POWER PLANTS AND TRANSMISSION NETWORK [...]
URGENT NEEDS
To urgently complete 7,000MW power plant that is currently under construction as well as to build 35,000MW plants (10,000MW by PLN and 25,000MW by private companies) on time and in accordance with good corporate governance. The target of 35,000 MW is not an easy target; however it must be achieved with hard work. Sufficient electricity is the key to achieving economic growth and prosperity for the people. (President Joko Widodo, April 7th, 2015)
IMPLEMENTATION STRATEGY [...]
IPP PROCUREMENT EASY, FAST, ACCOUNTABLE [...]
PROCUREMENT LIST OF 35,000 MW POWER PLANTS BASED ON POWER SUPPLY BUSINESS PLAN (2015-2015) (Ministerial Decree No.0074.K/21/MEM/2015) [...]
FREQUENTLY ASKED QUESTIONS
Why do we need to have the 35,000 MW project within 5 years?
This project is a must to support economic growth. As stated in the Power Supply Provision Business Plan 2015-2024, we need additional capacity of 7,000 MW annually. Do the government and PLN have the ability to implement this seemingly ambitious program?
This is not an ambitious project, but it is a need that must be implemented. The figure of 35,000 MW is based on growth of electricity needs. Potential problems have been carefully anticipated, ranging from funding, licenses and land acquisition to procurement procedures.
How can PLN manage such a huge project transparently, with no conflicts of interest, and successfully engage all stakeholders?
PLN implements good governance principles, encompassing planning, procurement, funding to construction implementation. In each process, PLN openly invites and engages the participation of all stakeholders.
How will PLN finance this project of more than Rp 1.100 trillion, and will it be possible considering the company’s financial condition?
PLN will build power plants to produce 10,000 MW, including the infrastructure for distribution transmission, from the total 35,000 MW. The remaining 25,000 MW will be built by private companies. PLN’s financial condition is sufficient to finance this project. PLN has also obtained funding commitments from national and international banks.
In addition, the government has showed its commitment by providing additional state funds to PLN. What will be the impact of the 35,000 MW electricity development projects for the people and nation?
The addition of the power plants and supporting transmission network will fulfill the national electricity needs for the electrification ratio to reach 97 percent.
The project’s success will not only increase public prosperity but also encourage economic growth and absorb new labor into the workforce. What are the requirements to participate in the project?
All national and foreign private enterprises, as well as state-owned enterprises, with the financial ability and a sound reputation will be entitled to opportunities as project or private developers. PLN will need private support to supply electricity.
In this regard, can an enterprise or private developer build a power plant at its own initiative and subsequently sell the electricity to PLN?
PLN welcomes initiatives and participation from private companies in electricity-supply efforts. This suggestion will be evaluated through discussion of the national Power Supply Business Plan.
The Publication is issued by PT PLN (Persero) for public information transparency. Corporate Secretary of PT PLN (Persero) Phone: (021) 726 1122 | Fax: (021) 722 1330