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New ruling on hydropower plant tariff expected to speed up project realization

 

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JAKARTA (rambuenergy.com) – The Energy and Mineral Resources Ministry on Monday launched the new ministerial decree no. 19/2015 on electricity purchase tariff for hydropower plant with capacity of up to 10 MW. The new ruling offers more certainty and more attractive tariff that are expected to lure investors to invest in the hydropower plants.

The new ruling is also expected to speed up the construction of hydropower plants in the country and at the same time prevent “brokerage” investors who are only interested to get license and then sell them to other parties.

Director General for New, Renewable and Energy Conservation at the Energy Ministry Rida Mulyana said during the launching of the ministerial decree late Monday at a hotel in central Jakarta that he hopes the new ruling will help speed up the development of hydropower plants in the country.

He however admitted that there are a number of factors that have hampered the development of hydropower plants in the country. Firstly, the tariff issue. In the past, tariff is negotiated between PLN, the state electricity company as the buyer, which demanded lower tariff, while investors or hydropower plant developers demanded higher purchase price. As a result, the hydropower plants projects realization was delayed or never comes into reality.

“This new ruling is non-negotiable as the tariff has been set,” he said at the launching. He said the tariff is set in US dollar, however, the transaction is done in rupiah, based on Bank Indonesia middle rate rupiah exchange rate to the US dollar in previous day (at 11.00 a.m.

The second problem is lack of commitment of investors to realize the hydropower plant projects. He therefore hopes the ruling will encourage investors to accelerate the realization of the project. Director for

Currently, there are about 250 hydropower plant project permits that have been issued, but they are yet to be developed.

Mulyana said Indonesia has the potentials to develop up to 75,000 MW of hydropower plant. “I won’t set ambitious target. It would be a great achievement if we can develop 10 percent of the potentiality or 7,500 MW,” he said.

The third problem that has often hampered the development of hydropower plant in the country is lack of coordination and support from Regency governments. Hydropower plant permits are issued by the local governments and the central government only set the tariff.

“However, most often local governments only want to get quick money when investors come in. They should look for longer view, that the hydropower plants would help increase the people’s welfare,” he said.

Based on the new ruling, the electricity tariff to be purchased by PLN from hydropower plant developers is set at US$12 cents USD per kWh for medium tension power plants of 250 kilowatt (Kw) to 10 MW for the first 8 years and US$7.50 cent USD/kWh from 9th year to 20th year.

For power plant with low capacity of 250 kW, the tariff is set at US$14.40 cent USD per kWh for the first eight years and 9 cent USD per kWh from 9th to 20th year. The government also added the “F” factor of between 1.00 to 1.60, depending on the location of the power plant. This means that remote and eastern Indonesian region will be set higher purchase tariff.

Furthermore, Maritje Hutapea, director for New and Renewable Energy, added that the new ruling would only attract serious investors because investors are required to put 5 percent deposit funds. “Previously, there are many brokers who get the permits, but then they sell it again to other investors to make money,” she said. (*)

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