Norman Harsono, Jakarta – Indonesia will need private sector help to provide the Rp 11 trillion (US$803 million) in funding required to power isolated regions this year, as the country's largest electricity company PLN can only fund one fifth of the projects, according to a government official.
The Energy and Mineral Resources Ministry's Electrification Director General Rida Mulyana said on Wednesday that the funds would be needed to develop power plants, transmission and substations in such regions.
However, state-owned utility PLN, could only finance Rp 2.1 trillion of the necessary work, he added.
The energy ministry would talk with the Finance Ministry to create a fiscal incentive for private companies to invest in electrification, he said. The government currently offered such an incentive exclusively for state-owned enterprises.
"Hopefully, we'll have a solution in the first half of the year. We could have PLN and the private sector work together to resolve the issue," Riza told reporters in Jakarta.
PLN and the energy ministry aim to push Indonesia's electrification ratio to 100 percent this year. The country closed last year with a 98.89 percent ratio and the two organizations are struggling to electrify the last stretch, which comprises the most out-of-the-way regions.
Energy analysts and politicians have also criticized the electrification ratio as it does not fully represent field conditions. Many villages do not enjoy 24-hour electricity and many have low-power electricity that is only enough to power lightbulbs and charge mobile devices. Neither conditions are suitable to push regional economic growth.