In 2004, the Government of Indonesia announced that it was
embarking on a 10,000 Megawatts Acceleration Programme aimed at
increasing the country's electricity generating capacity (to
10,000 MW) by 2010. However, it now seems that the target date
will have to be extended in order to reach that goal.
One of the obstacles that hindered the Government's efforts
to increase power capacity and its ability to attract
investment into new power infrastructure projects was pricing,
primarily because the price at which at which state-run PLN
Persero sells electricity to the market is determined by the
Government and below the production cost of electricity. (The
Government has reportedly allocated $4.7 billon next year to
PLN has a monopoly on the distribution and sale of
electricity in Indonesia. It also operates 85% of the country's
domestic generating capacity. Given PLN's monopoly, the private
sector's entry into the...