Govt drafts in­cen­tives to gen­er­ate power from waste

The Jakarta Post - - BUSINESS - Rach­madea Aisyah

In­vest­ment of Rp 66 tril­lion needed to de­velop waste-to-en­ergy sec­tor In­cen­tives be­ing for­mu­lated to make the sec­tor more at­trac­tive

The gov­ern­ment is pre­par­ing in­cen­tives to en­cour­age the de­vel­op­ment of waste-to-en­ergy plants as part of an ef­fort to cope with the coun­try’s mount­ing waste prob­lem.

In­done­sia re­quires Rp 66 tril­lion (US$5 bil­lion) to grow the sec­tor, ac­cord­ing to an es­ti­mate from the Pub­lic Works and Pub­lic Hous­ing Min­istry.

In­vest­ment Co­or­di­nat­ing Board (BKPM) in­fra­struc­ture plan­ning di­rec­tor Heldy Putera said that his of­fice was com­ing up with sev­eral in­cen­tives to at­tract in­vestors, in­clud­ing an eas­ier per­mit ap­pli­ca­tion process for the con­struc­tion of waste-based power plants (PLTSa).

“We are will­ing to give the in­vestors cer­tainty to start their busi­ness and an ex­emp­tion from im­port du­ties on equip­ment,” Heldy said dur­ing a re­cent con­fer­ence or­ga­nized by the Of­fice of the Co­or­di­nat­ing Mar­itime Af­fairs Min­is­ter and Den­mark, Swe­den, Fin­land and Nor­way.

Th­ese Nordic coun­tries boast the world’s most ad­vanced waste man­age­ment tech­nol­ogy.

The BKPM would also co­or­di­nate with re­lated gov­ern­ment in­sti­tu­tions to set com­pet­i­tive rates for tip­ping fees at waste pro­cess­ing fa­cil­i­ties, Heldy added.

The at­tempt to find al­ter­na­tives in man­ag­ing surg­ing do­mes­tic waste in In­done­sia is now more im­por­tant than ever as the gov­ern­ment is run­ning out of time and op­tions.

It has in­cluded waste-to-en­ergy de­vel­op­ment projects in its lat­est list of 245 na­tional projects is­sued in May.

To­hari Ha­diat, the re­new­able en­ergy divi­sion head at sta­te­owned elec­tric­ity firm PLN, ac­knowl­edged that the high cost of build­ing waste-based power plants is a bur­den to the firm as it has had to sub­si­dize its elec­tric­ity at 13.14 US cents at the cheap­est, which is much higher than the firm’s elec­tric­ity sup­ply cost (BPP) of 7.39 cents.

“Ad­di­tion­ally, there’s a prob­lem re­lated to how we can en­sure peo­ple that this type of power plant tech­nol­ogy can gen­er­ate en­ergy safely with­out harm­ing the en­vi­ron­ment,” To­hari said.

In Fe­bru­ary, the Supreme Court re­voked Pres­i­den­tial De­cree No.18/2016, which aimed to ac­cel­er­ate the con­struc­tion of waste­based power plants in cities across the coun­try, af­ter it was chal­lenged by ac­tivists who ar­gued that the in­cin­er­a­tors used by th­ese fa­cil­i­ties would en­dan­ger the en­vi­ron­ment.

In ad­di­tion to ac­knowl­edg­ing the high in­vest­ment needed to build such waste-based plants, To­hari con­ceded that they would also have a thin profit mar­gin, mak­ing the sec­tor’s in­vest­ment cli­mate even less at­trac­tive to in­vestors.

Frank van Wo­er­den, lead en­vi­ron­men­tal en­gi­neer for the World Bank’s East Asia and Pa­cific Re­gion, pointed out what he de­scribed as more fun­da­men­tal is­sues to ad­dress.

“There are very good schemes for this [waste-to-en­ergy sec­tor]. But, un­for­tu­nately we are talk­ing about messy, bulky, mixed trash in big cities,” van Wo­er­den told The Jakarta Post on the side­lines of the con­fer­ence.

“There­fore, it’s not very fa­vor­able for In­done­sia to go for the newer tech­nol­ogy, which re­quires as­sorted trash.”

The World Bank has dis­cussed the mat­ter with the gov­ern­ment as it is ready to aid In­done­sia in kick-start­ing the in­te­grated de­vel­op­ment of waste-to-en­ergy projects in the coun­try, van Wo­er­den fur­ther said.

“We can sup­port the cities in choos­ing the tech­nol­ogy, the con­trac­tors. To en­sure they have the ex­per­tise to op­er­ate such a com­plex sys­tem, the gov­ern­ment has to make a very clear ar­range­ment and it takes a lot of time, and that we can help,” he said.

The en­vi­ron­men­tal en­gi­neer added that the tech­ni­cal as­sis­tance would greater ben­e­fit In­done­sia com­pared to loans.

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