Team to probe woes in renewables sector

ASEAN+ May 02, 2018 01:00

By THE JAKARTA POST
ASIA NEWS NETWORK
JAKARTA

THE Indonesian government plans to set up a team to solve financing problems for renewable energy power plants, as the government has signed 75 power purchase agreements (PPAs) with private companies.



The team would consist of representatives from the Financial Services Authority (OJK), state-owned electricity firm PLN as the off-taker, the Finance Ministry and the Energy and Mineral Resources Ministry.

According to data from the Finance Ministry and the Energy and Mineral Resources Ministry, only three of the PPAs have entered the operation phase, while 17 were in the construction phase, four in pre-construction and 46 others had yet to achieve financial closure.

“The objective of [the team] is to find financing solutions for the 46 PPAs. One of the options is to bundle the funding for the 46 PPAs,” the ministry’s diversified new and renewable energy director Harris said recently.

Previously, the private companies holding the PPA contracts had complained that the ministerial decree on renewable energy for electricity was hampering funding of those projects, because an article on the build-own-operate-transfer (BOOT) scheme required investors to hand their projects over to PLN when the agreements expire.

“Because of this BOOT scheme, the banks are reluctant to provide financing, as the projects cannot be used as collateral,” Hydropower Plant Developers Association (APPLTA) secretary-general Muhammad Assegaf said last week.

Harris, meanwhile, said the problem had emerged only because banks failed to fully understand investment in the renewable energy sector. 

 

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