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Govt Invites Local Component Makers to Join Big Projects

The Industry Ministry aims to build 200 units of small-scale power plants to reserve 7,000 megawatts (MW) using components sourced locally as part of the government’s ambitious plan to develop a 35,000-MW electricity project.

Small-scale 7-MW coal power plants, which cost around US$2.5 million each, are projected for use in remote regions throughout the country.

According to the ministry’s director for industrial and agricultural machinery, Teddy C. Sianturi, the initiative is expected to increase local industrial content (TKDN) from the current 22 percent to 30 percent in two years.

Teddy suggested that local electrical component manufacturers band together with other stakeholders to form a consortium to discuss the most feasible regulatory and monetary options.

“The consortium is used to safeguard 7,000 MW [for the domestic industry] because there’s an issue with funding,” Teddy told The Jakarta Post on Thursday on the sidelines of a symposium in Jakarta.

Teddy said the state would have to issue a presidential decree to consolidate the roles of all parties involved in the consortium, including the Finance Ministry. “The [Finance] Ministry should be involved in enforcing specific monetary policies, including funding,” he said.

In a bid to increase power supply, the government has planned to add 35,000 MW of electricity output across the country by 2019.

Coordinating Maritime Affairs Minister Indroyono Soesilo previously said that the state would allocate a share of the projects to the domestic market, even requiring manufacturers to maintain a 40 percent level of local content, depending on the scale of each power plant.

Teddy revealed that state-owned electricity company PT PLN would be developing 15,000 MW, with 7,000 MW awarded to local manufacturers over the five-year period, or 1,400 MW per year.

“If we manage to construct 200 units per year, the PLTU project alone would fulfill the 30 percent requirement for local industrial content overall — unless the regulatory framework doesn’t exist,” he explained.

Meanwhile, the Energy and Mineral Resources Ministry’s research and development department head FX Sutijastoto said that the domestic electrical components market was already capable of constructing power plants, though only on a small scale.

“It is the government’s responsibility to provide business opportunities [for the domestic market]. This is what we’re trying to coordinate,” Sutijastoto said on Thursday.

Among the stakeholders involved, the government has appointed 12 national engineering and procurement companies (EPCs) to head the construction projects, including PT Rekayasa Industry, PT Wijaya Karya and PT Medco Energi Internasional.

The bidding process has yet to start, but the total estimated investment by EPCs is expected to reach more than Rp 1 quadrillion (US$79.4 billion).

Source : www.thejakartapost.com, Saturday 17 January 2015