PT. Indonesia Power places high importance on meeting the strictest international standards.

Backbone of the country’s future growth, PLN faces the challenges of growing demand for power supply

ith the Indonesian economy finally beginning to pick up following the 1997 Asian financial crisis, continued growth of the country’s electricity infrastructure is fundamental if the nation hopes to avoid an economic short-circuit.

The country’s improved economy has meant increasing electricity demands, posing a major challenge for the state-owned power company PT PLN. The company also faces the additional challenges of increased competition in the sector as deregulation, which was originally planned for 2007 but has been delayed, looms on the horizon. However, although foreign and domestic companies will be able to sell electricity directly to consumers once deregulation is carried out, they will still need to use PLN's transmission network, which will give the company excellent leverage when the time comes.

PT. Indonesia Power, a PLN subsidiary, will no doubt be the parent company’s shining star as it gears up to face the challenges of ever-increasing demand and a competitive business environment with a growing number of participants.

Indonesia Power is the largest electrical power generating company in the country, mainly serving the Bali-Java grid where electricity demand has been growing at an average of seven to nine percent a year. Between them, the two islands account for more than 80 percent of the nation’s electricity demand. Indonesia Power is currently seeking investment to increase production at its eight generating plants, which have current capacity to supply Java and Bali with nearly 60 percent of their electricity needs. Overall, Indonesia Power now produces nine thousand megawatts but it will have to increase production by seven percent a year to meet demand.

PT. Indonesia Power is looking for new investment to boost production by 7 percent at its eight generating plants.

Indonesia Power is putting the final touches on an IPO planned for around June of this year, when it will float about 5 percent of the company. The objective is to raise its profile within the international investor community and to improve its credit ratings so that it can borrow more cheaply in the debt markets to finance its ambitious expansion plans. These include building three new plants in southern Sumatra and converting that area of the country into a national center for electricity distribution.

As Indonesia Power readies itself to face global competition, company officials are quick to point out that to be successful in the world of competitive power generation does not simply mean increasing efficiency and applying international standards to all it operation. Indonesia Power knows that it will also have to continue to nurture its relationship with its employees and with the communities in which it operates.