Government Urges PLN To Increase Efficiency To Lower BPP

JAKARTA - The Ministry of Energy and Mineral Resources encourages the state electricity company PT PLN (Persero) to increase efficiency in order to reduce the basic cost of supplying electricity or BPP.

"The government must encourage PLN to continue its efficiency movement or program so that BPP continues to decrease," said Director General of Electricity at the Ministry of Energy and Mineral Resources, Rida Mulyana, quoted from Antara, Friday, June 17.

Based on the composition of the PLN electricity BPP outlook 2022, the electricity BPP was recorded at IDR 387.03 trillion.

The cost of purchasing electricity from private power plants occupies the top position with a share of 36.18 percent or equivalent to Rp. 140.04 trillion.

Then, the second position was filled by the cost of purchasing fuel with a share of 32.93 percent or the equivalent of 127.45 percent.

"This is based on the assumption that the price of crude oil is US$63 per barrel. So, if it is US$104 per barrel, the share of fuel costs will increase, which will increase the overall BPP," Rida explained.

He explained that of all types of fuel used by PLN, only oil was exposed freely, so it was highly dependent on price movements in foreign markets.

Meanwhile, the government has regulated coal and gas fuel through a domestic market obligation (DMO) policy.

"Coal is pegged at 70 US dollars per tonne and gas at 6 US dollars per MMBTU. Although the prices of coal and gas abroad are expensive, they are cheap domestically due to government policies and decisions," Rida explained.

In an effort to encourage efficiency within the company, PLN is committed to reducing diesel power plants or PLTD to reduce fuel oil consumption.

In the first stage, PLN plans to convert around 212 megawatts of PLTD in 183 locations into a hybrid with a solar power plant (PLTS) and a battery energy storage system (BESS).

PLN has 5,200 units of diesel power plants spread over 2,130 locations in Indonesia with a total conversion of 1,873 megawatts.

PLN's Director of Commerce and Customer Management Bob Saril said that his party continues to increase efficiency with the main focus on using fuel or energy mixtures to reduce expensive fuels, one of which is diesel power plants.

In addition, the company also encourages the use of technology so that the energy produced can be greater than the fuel used in the generation sector.