POWER UP

Indonesia 2018 | ENERGY & MINING | INTERVIEW

TBY talks to Sofyan Basir, Director of PLN, on its plans for its Komodo bond, the growth in renewable energy development, and ensuring access for the entire country.

 Sofyan Basir
BIOGRAPHY
Sofyan Basir has been President Director of PLN since 2014. He was previously President Director of BRI and before that, he served as President Director of Bank Bukopin. He earned a diploma from STAK Trisakti, a bachelor of economics from STIE Ganesha, and an honorary doctorate from Trisakti University.

What progress has been made toward the government's 35GW energy generation plans?

This program started in May 2015, and we currently have signed contracts worth around 32GW of the planned 35GW. The remaining 3GW will be done by PLN directly. We are working hard to expand capacity based on our 10-year plan. Every year, this plan is adjusted based on the realities of the market and the conditions of the economy. We remain focused on profitability, sustainability, and financial integrity, which are all paramount to running a successful business.

What are the unique attractions of the Komodo bond and do you have plans to issue them as well?

The response from the market to the Komodo bond has been extremely enthusiastic, leading to over-subscription. Depending on the market response and pricing, we plan to issue a similar bond in the coming year. It is too soon to speculate how much money we will be able to raise, though we are confident that it will do well. We have already earmarked much of these funds for transmission and distribution, which we must invest in order to attract private capital. Additionally, we are focused on directing some of these funds toward renewable energy. We invite local investors to support these transmission and distribution efforts, and we have had a great deal of support from local banks. Nearly 95% of these programs are aimed at the local level. This will form the backbone of the network that will handle additional generation capacity.

How did recent ministerial regulations governing IPPs change your outlook?

The new regulations work to reduce the price of electricity and increase access and will have a positive effect on the industry, because it will improve the general population's access to power. It will also stimulate the broader economy by ensuring that the power supply is more reliable and continuous. Industry will be particularly well served by this development. We are working hard to achieve the government's stated renewable energy generation goals. Indonesia has many resources in the geothermal and hydro energy areas, and we will rely heavily on these sources to reach the 2025 targets. Additionally, some intermittent energy will be introduced. Solar and wind energy will be important parts of these plans, and we have almost finished constructing a 75MW wind farm that will be the largest in Southeast Asia and should come online in early 2018. We are extremely pleased to be able to participate in these projects.

Will the new regulations hinder renewable energy development?

We have signed contracts on 70 projects representing 1.2GW of renewable energy, illustrating that even under the new regulations renewable energies are growing and developing in a dynamic manner. These projects have not closed financing yet, though this is the largest development of renewable ever, which underlines just how strong the market is. The new regulations are not a threat to renewable energy development.

Will supply from the plants you are building in the eastern part of the country exceed demand in those areas?

There is a great deal of suppressed demand in areas in the east of the country, and we are excited and hopeful about developing these spots. Most of our customers in eastern areas use private diesel for home energy generation. Once we will be able to supply these people with a more permanent supply, they will switch to our energy grid. Development outside of Java has been slow historically; however, we are currently focusing a great deal on expanding our services in these areas. We want the entire country to have access to services similar to those available in Java and Sumatra. Until 2019, a large portion of the installed capacity will come outside of Java and in the eastern areas.