Interview: Heru Dewanto, PT Cirebon Power
I’ve spent more than 20 years of my career in the infrastructure industry in the area of transportation, multi-storey housing, and lastly energy. I entered the energy infrastructure sector in 2008 by joining Indika Energy, the third largest Indonesian coal producer. Through Indika Energy I was involved in the construction and commissioning of the first unit of Cirebon Power 660 MW until achieving commercial operation in 2012. Since then, I’ve been leading the development and construction of the second unit of Cirebon Power 1000 MW.
Cirebon Power’s first unit 660 MW was among the first to apply Supercritical boiler technology and its second unit 1000 MW Ultra which is under construction will use Ultra Supercritical technology. Cirebon Power is owned by Marubeni Corp, Indika Energy, Samtan, Komipo and Jera. The projects are supported by JBIC, KEXIM, NEXI and commercial bank syndication. Doosan was selected as EPC contractor for the first unit and Hyudai, MHPS, TSB are chosen for the 2nd unit.
I started in a Director position in Cirebon Power first unit and then became Vice President Director. I’ve led Cirebon Power second unit from the very beginning as President Director.
There have been near to 125 issuances of new and amended regulations related to electricity for the last five years. In 2017 alone 40 new regulations were issued. Such constantly moving regulatory framework scares off investors and lenders. It is important to understand that regulatory changes will cause significant and drastic impacts to highly regulated industry like electricity.
In 2017, the government issued RUPTL 2017-2026 and plan to develop 78 GW power generation. Only within a year in 2018, RUPTL 2018-2027 was issued and 22 GW was slashed from the plan. Such drastic changes in long term infrastructure planning may send confusing signals to developers.
The government is determined to make coal the nation’s main source of energy with a 50% share for the next 10 years. As such, the government needs to advocate their policy if they wish to succeed with their electricity plan. Coal is now facing increasing challenges from environmental and lately from financing front. Coal is becoming the common enemy of the world that will result in global financing scarcity.
There is a growing believe that Indonesia should use its abundant coal for energizing the nation rather than for commodity trading. Coal production will remain stable at around 400 million ton annually while its portion of domestic use will approximately reach 50% in 10 years.
The existing market structure allows PLN to determine the market so that the new policies may be issued to serve PLN interest. Market restructuring such as establishment of independent regulatory body, clear separation between regulator and operator, or vertical unbundling can be considered in the future.
Massive infrastructure program must also gain momentum to significantly improve and increase national capabilities, such as Indonesian IPP, EPC, manufactures and engineers. New policies are moving towards this direction.
: Coal will remain as the backbone of Indonesia power until renewable energy price will be as cheap as coal. However, such policy needs to be fully supported as coal is getting a growing pressure from environmentalists. Coal projects are now facing serious challenges on the ground and scarcity in financing.
First Generation IPP (1992-1998): only 15 out of 27 IPPs can deliver their projects.
Second generation IPP (2004-2009): only 18 out of 126 IPPs can be implemented.
Third generation IPP (2010 onward): 1 of 3 PPP projects can be delivered. 59 FTP projects were delayed and carried over to next 35 GW programs.
35 GW programs: 2 GW reaches COD, 83% has signed PPA. Even though the program is delayed, by far it the most successful one.
The success rate of IPP is still relatively low.
: We need a robust regulatory framework, consistent planning, firm balance and workable energy mix, domestic use of coal, market restructuring, and development of national capabilities.
: Use of domestic coal and advocating coal for developing countries.
This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.
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