Final freedom for electricity

Author: | Published: 1 Nov 2009

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 subsidise electricity.)

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...



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