State-owned Indonesian power group PLN has warned that power supply to the Java-Bali region is in a critical condition as its output has reached its maximum capacity.

New plants have not been built to meet increasing demand, which rose 6.4% year-on-year in the first quarter of 2005. The cash-strapped utility is struggling to develop new generation capacity from its balance sheet while the 1998 financial crisis has limited investment along with uncertainties over the electricity law that has kept foreign investors away.

Muldjo Adji, who heads PLN’s Center for Regulator of Loads (P3B), has been quoted as saying that PLN has only been able to avoid routine power outages by regulating distribution.