The bank said that the crisis could be avoided if the financial condition of state electricity company PLN was improved, to allow new investments in the sector. It estimates the necessary level at around $28.5 billion up to 2010 to offset the shortfall between a flat capacity maximum of 18.7 GWe to at least 2004 and expected demand, projected to rise sharply to around 18 GWe in the same year from its present level of 16 GWe. Allowing for inefficiencies and peaking, the situation can only deteriorate further in an already strained system.

PLN has been in trouble since 1997 owing to the regional recession, and has accummulated losses of US$5 bn which it has tried to recoup by raising electricity prices quarterly by an average of 6 per cent. The aim is to reach 7c per kWh by 2005, reckoned to be the commercial level, but stiff consumer resistence has forced the government to slow down the rate of rise or delay price hikes altogether.

One way out of the crisis in the long term would be to build nuclear plant, according to technology minister Hatta Rajasa, who says that the country has the capability, and should use it. A long term plan is already being mooted, with construction due to start in 2010. Indonesian scientists are reputedly putting together feasibility studies and are expected to have a blueprint for a nuclear programme ready by 2006. It is believed that the government could revive abandoned projects first conceived in the 1990s under president Suharto.