News Room - Business/Economics

Posted on 15 Dec 2009

RI’s coal, gas power plants promising, EU study says

A recent study for the European Union has highlighted Indonesia’s nascent coal and gas power plant sector as among the most promising for investors from the continent.

 

The study, revealed last week, said Indonesia, with strong annual economic growth of more than 5 percent over the past several years, will continue to see increased demand for electricity.

 

“The study also recognized that the power generation sector in Indonesia is one of the most promising businesses where European enterprises have technological or design capacities complementary to Indonesian needs,” Julian Wilson, ambassador of the delegation of the European Commission to Indonesia and Brunei, said last week.

 

He added the EU welcomed the Indonesian government’s program to shift a large part of its power generation from oil-burning plants to less market-sensitive sources such as coal and gas.

 

The study also showed EU enterprises were very competitive in power generations projects run on renewable energies, including hydroelectric, geothermal, nuclear and wind, but pointed out the prospects for these technologies in Indonesia were not yet feasible in the short term.

 

“Nuclear power plants, for example, attract a lot of attention, but the competition will be intense for a single project only, and therefore there will be only one winner,” Wilson said.

 

The government, through state-owned electricity monopoly PT PLN, has decided to focus mostly on coal-fired plants through its 10,000-megawatt (MW) power-generation scheme.

 

At least 24 coal-fired power plants are scheduled for construction within the next few years.

 

However, no European companies have so far gotten involved in the project, dominated by Chinese and Japanese firms.

 

The EU study also said Chinese products in Indonesia enjoyed a significant advantage through their low prices compared to European products, which it said were more expensive but less polluting.

 

“Europe is at the forefront of developing ‘clean coal’ technologies that could find an application in Indonesia,” the study said.

 

“PLN itself has appreciated it and qualified it as ‘expensive but good.”

 

Therefore the European business community saw this sector as promising for the future, Wilson said.

 

Unlike the price-competitive coal power plant business, the EU remains confident in the gas power plant sector.

 

The study said Europe was the current market leader in related technology and products, and the reference for the gas sector, thus was not threatened by lower-priced Chinese products.

 

EU businesses’ main competitors in this area come from the United States and Japan, both of which boast cutting-edge gas technology.

 

Indonesia’s Energy and Mineral Resources Ministry said recently the government hoped to attract US$21.68 billion in investment for gas projects between 2010 and 2014.

 

National Investment Coordinating Board (BKPM) chairman Gita Wirjawan said the country was eyeing 10 percent foreign direct investment growth in 2010, after experiencing a significantly drop this year due to the global economic turmoil.

 

“We’ll focus on the energy and manufacturing sectors,” he said.