Indonesia’s President Prabowo Subianto has ordered a comprehensive overhaul of state-owned power utility PT PLN.
The president met with government ministers and PLN representatives last week to discuss a transformation focused on increased efficiency and an accelerated rollout of 100 GW of solar, according to a media statement.
The Indonesian government officially launched its flagship solar program in August, with President Subianto setting a target of deploying the planned 100 GW within the next three years.
After last week’s meeting, Rosan Roeslani, head of the country’s investment coordinating board, said President Prabowo requested PLN’s transformation focus on improving the company’s business model. Roeslani added a transformation plan is now being prepared before it is presented to the Head of State for follow up.
“[We] will certainly sit down with the PLN team to ensure this transformation can be carried out comprehensively, thereby reducing subsidies and increasing efficiency and productivity at PLN,” Roeslani said.
The announcement coincides with a change of leadership at PLN with Suroso Isnandar, who also attended the meeting, taking over as president director of the utility.
In a statement sent to pv magazine, the Institute for Essential Services Reform (IESR) says PLN’s new leadership will be tasked with making it “a public utility company that is financially healthy, efficient, able to ensure reliable and affordable electricity supply, and a driver of Indonesia’s energy transition.”
The think tank explained PLN has been facing a series of pressures, including supply disruptions and power outages in a number of regions this year, as well as a heavy reliance on government subsidies and compensation.
IESR CEO Fabby Tumiwa said the utility needs to change its business model “from a company that relies on electricity sales to a modern electricity system service provider.”
“PLN’s revenue and performance should not only depend on the amount of electricity sold, but also on its ability to maintain network reliability, improve efficiency, integrate renewable energy, and provide quality services to consumers,” he explained.
Tumiwa added this transformation is even more urgent amid the 100 GW solar power program, development of energy storage, electrification of transportation and industry and increasing use of distributed power plants.
“These developments will change the way electricity is produced, distributed, and consumed,” he continued. “Without changes in business models and network modernization, PLN risks facing increasing costs and increasing investment burdens.”
Tumiwa said the 100 GW solar program must be accompanied by electricity procurement reform, grid modernisation, energy storage investment, reducing coal plant assets and opening up a wider space for private participation, local governments and communities. His comments follow an IESR report published earlier this year which explored how Indonesia can mobilize its 100 GW target.
“A strong PLN is not a PLN that must own all the plants and work on the entire electricity business,” Tumiwa concluded. “A strong PLN is a PLN that is able to guarantee that electricity stays on, the price is affordable, the finances are healthy, and the system is ready to switch to clean energy. That is a big job that awaits the new president director.”
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