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Indonesian outage leaves 100m without electricity

By Shawn Donnan in Jakarta

Published: August 19 2005 01:56 | Last updated: August 19 2005 01:56

Some 100m Indonesians were without electricity on Thursday as power outages hit the country's main grid, leaving office workers in Jakarta trapped in elevators and the state-owned power monopoly struggling for an explanation.

Perusahaan Listrik Negara said power was last night being restored across most affected areas after a failure hit the Java-Madura-Bali inter-connection system at 10:23 am, causing outages across the main island of Java and nearby Bali.

But Eddie Widiono, PLN's president, warned that yesterday's problems highlighted the fragile state of an electricity grid that almost half of Indonesia's 220m population relies on.

In parts, the main transmission lines were more than 20 years old, Mr Widiono told reporters. The outages also highlighted what is rapidly becoming an energy crisis for Indonesia, one of the world's most resource- and energy-rich countries.

The World Bank and others have warned that lack of investment in the power sector would create a power-generating deficit as the economy and demand for electricity grew.

In January the Indonesian government told investors attending a special infrastructure summit that it needed to add more than 22,000 MW of generating capacity by 2010 at a cost of more than $30 bn ($25 bn, 16.5 bn). That would double Indonesia's current capacity of about 23,000 MW.

To keep up with growing demand, now roughly in line with the country's "effective" generating capacity of about 19,000 MW, Indonesia needs to add 2,400 MW a year at an estimated cost of $2.5 bn annually.

Even as it tries to attract fresh investment to the power sector, analysts say Indonesia is struggling to put together an attractive landscape for investors.

Many power investors suffered during the 1997-98 Asian financial crisis when Indonesia's currency woes caused it to renege on dollar-denominated generating contracts with independent power producers.

In a big setback last year, the Constitutional Court struck down a 2002 electricity law that would have opened up the sector to competition and privatization. The government of President Susilo Bambang Yudhoyono, which wants to attract $150 bn in infrastructure investment over the next five years, has said it is working on a new law.

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