BRINGING POWER INTO THE NATION ANDTHE WORLD

The Role of Private Sector

in Fulfilling the Demand of Electricity for Industry

By N. Hasto Kristiyono

President Director & CEO – PT Sumberdaya Sewatama

The 69th National Electricity Day Event Series : “Electricity for Prosperity”

October 1st – 3rd, 2014 – Jakarta Convention Center

BRINGING POWER INTO THE NATION ANDTHE WORLD

Strong National Resilience to Compete Globally

16th1st 2nd 3rd 4th 5th 6th

27th1st 2nd 3rd 4th 5th 6th

2000

2013

Need to Generate

More Power

BRINGING POWER INTO THE NATION ANDTHE WORLD

Industrial Electricity Supply / Demand Situation

Taxonomy of Electricity Sector Provision

UUD 1945Pasal 33 Ayat 2 &3

UUD 1945Pasal 33 Ayat 2 &3

Definitive

Regulation

Definitive

Regulation

� UU No. 15/1985 replaced with;

� UU No. 9/2009 on Electricity

Provision

ELECTRICITY

SUPPLY

Generation

Transmission & System Operation

Distribution

IPPs Self-Generation Co-operatives

PPA

Growth 3%-5%

� UU No. 30/2007 on Energy

� UU No. 30/2007 on Nuclear

� UU No. 30/2007 on Oil & Gas

� UU No. 30/2007 on Geothermal

� UU No. 30/2007 on Hydro Resources

� SU No. 30/2007 on Coal & Mineral

Regulation on

Energy Upstream

Regulation on

Energy Upstream

Private Sector

Strong Electricity Demand on Industry

+

Global / RegionalEconomics Drivers

Global / RegionalEconomics Drivers

ELECTRICITY

DEMAND

CUSTOMERS Industrial - Continuous

Business / Commercial - Base load

Captive Power - Backup

SAIDI / SAIFI Cost of Electricity

Growth 9%-10%

Performance

Source: RUPTL & PLN Statistic

+

BRINGING POWER INTO THE NATION ANDTHE WORLDBRINGING POWER INTO THE NATION AND THE WORLD

Lack of Electricity Infrastructure Development

� Land acquisition

� Source of financing and/or Government Guarantee

� Tariff acceptance – reliance on subsidy

� Primary Energy location gap, vis-a-vis archipelago nature of the

country

� Low reliability of product & technology selected based on initial cost

� Local Government Autonomy vs Capacity

� Bureaucracy pitfall - “Form Over Substance”

KEY EXISTING CHALLENGES

T&D Development RealizationFTP Project Progress

+

MW %

Initial target 2009

(100%)

Source: PLN presentation Source: PLN statistic

Needs balancer and/or complement to Public Utility player

BRINGING POWER INTO THE NATION ANDTHE WORLDBRINGING POWER INTO THE NATION AND THE WORLD

Private Sector/Player Characteristics and Differentiators

� Regulatory Compliance

� Project Development approach

� Environmental and Social Responsibility

� Form of accountability and degree of closeness

to shareholders

� Speed of decision making

� Flexibility of solution approach – Substance over

Form

� Risk appetite – business oriented investment

process

� Speed of project execution

� Adoption of Proven Technology

General Characteristics Differentiators from Public player

BRINGING POWER INTO THE NATION ANDTHE WORLD

Longer term Sustainable Solution Medium term Power Solution

Meeting Indonesia’s Electricity Needs …

Role of Private Sector in Fulfilling the Demand

Being a credible complement to Public Utility in covering the entire country geographical regions with

Imbalances in regional development & substandard electricity support

As a bridging process to close the supply and

demand gap ���� Temporary Power Solution

� Relevant

� Rapid

� Proven

� Reliable

Fill-Gap Short term Power Solution

Some relevant solutions for Industrial Customers:

� Optimizing existing assets

� Operations & Maintenance

� Supply and Demand Side Management

– Energy Efficiency & Optimization –

� Thermal Power Solution

� Renewable Power Solution

Key Success Factor /Supports needed by Private Sector in Accelerating

Electricity Development

� A clear division of authority in the governance and provision of electricity in Indonesia

� Licensing / permit issues (central vs. central government)

� Robust but Nimble cooperation framework and Speedy bureaucracy culture in the

implementation of process

� Support/Endorsement towards the creation of integrated sustainable power solutions

� A change in mindset towards Proven Technology (procurement process)

� Acceleration in Power Wheeling rule to encourage the smoothness of “alih wilayah usaha”

BRINGING POWER INTO THE NATION ANDTHE WORLD

Thank You