TEMPO.CO, Jakarta - Many questioned the State Electricity Company's (PLN) decision to cancel the auction process for the 2,000 Megawatt (MW) Jawa-5 Steam Power Plant project. The decision is predicted to have implications towards the investment climate.

"The PLN should have repeat the tender process instead of appointing PT Indonesia Power [IP] cooperating with Mitsubishi, Japan. This [decision] can confuse potential investors," said Fabby Tunmiwa, Executive Director for Essential Services Reform (IESR) on Friday, September 23, 2016.

Fabby asserted that something was not right about the project because PLN just suddenly appoints a Japanese partner. PLN argued that the appointment was made to promote equality as most projects have been handed over to Chinese companies.

Although Fabby admitted that based on Presidential Regulation No. 4/2016 on the Acceleration of Electricity Infrastructure Development, PLN has the authority to appoint one of its subsidiary to work on a project.

However, because of the considerably high value of the Jawa-5 power plant project, which reaches up to Rp 30 trillion, the subsidiary will have to partner with a foreign company. "Who can guarantee that Mitsubishi has the best and most competitive prices?" Fabby questioned.

Similarly, Ahmad Redi, natural resources law pundit from Universitas Tarumanegara said that the cancellation of the auction is questionable because the Jawa-5 project is part of the 35,000 MW mega project.

Ahmad also expressed his concern over Indonesia Power’s capability to handle the project.

"Don't let the policy violates any regulation and caused suspicions over possible vested interests," Ahmad said.

ANTARA