Energy Ministry Blames Middlemen for High Electricity Prices

TEMPO.CO, Jakarta - Energy and Mineral Resources Ministry said that middlemen have taken advantage of power generation business for personal gains. The ministry’s official Rida Mulyana said that middlemen often sell their power plant licenses. “To sell their licenses, which have caused higher costs,” he told Tempo yesterday.

Rida said that developers have no intention to build power plants because they don’t follow it up with power purchase agreement. As a result, the energy reserves stored at their domicile remain untapped.

Rida said that the practice is commonplace in micro hydro-power plant (PLTMH) projects. Middlemen often misuse location permit issued by local governments.

Rida has brought the issue into a forum on coordination and supervision of energy sector held by the Corruption Eradication Commission. “Regents usually attend [the forum].”

President Joko “Jokowi” Widodo on Tuesday raised the issue of middlemen in power generation projects. Jokowi has blamed middlemen for high electricity prices. He noted that high electricity prices undermine Indonesia’s competitiveness. For instance, the President said, electricity price in Serawak, Malaysia, is 2 US cents per kWh, whereas that of Indonesia is 6 US cents per kWh. Jokowi has therefore instructed Energy Ministry and state-owned electricity company PT PLN to streamline licensing process for power generation projects.

PLN procurement director Iwan Santoso said that the PLN has adopted stricter regulations to better select power generation investors. The company requires financial statement audits and technical feasibility of bidders. The winning bidder will have to submit a commitment fee of 10 percent. If the company fails to develop power plants according to the agreement, the PLN will reserves the right to retain the fee.

ROBBY IRFANY | ADITYA BUDIMAN