State-owned coal producer PT Bukit Asam (PTBA) will team up with Chinese electricity company China Huadian Hongkong Company Ltd. to build and operate a coal-fired power plant in South Sumatra.
“The joint venture will be engaged in the production of electricity,” PTBA said in an announcement submitted to the Indonesia Stock Exchange (IDX) recently.
Under the agreement, PTBA will hold a 45 percent stake in the joint venture, called PT Huadian Bukit Asam Power, while China Huadian will own the other 55 percent.
Bukit Asam and the Chinese company won a tender launched by the state electricity company PT PLN last year to build and operate the PLTU Sumsel 8 coal-fired power plant in South Sumatra.
The power plant is designed to produce 2×620 megawatts (MW) and will require a total investment of US$1.59 billion. About 25 percent or $397 million of the total investment will be funded by equities and the other 75 percent by bank loans.
Based on its ownership percentage, PTBA will need to deliver $178.98 million in investment for the project. The company said that it would deliver $2.25 million initially and would disburse the remaining funds gradually, which would be financed by its internal cash.
PTBA held Rp4.26 trillion ($443 million) in cash and cash equivalent at the end of June, according to figures from its financial report.
“We are expecting that the China Development Bank will give loans to support the remaining 75 percent of total funds needed,” PTBA president director Milawarma said.
PTBA said that it would supply the joint venture with 5.4 million tons of coal per year for the power plant. The coal supply agreement will be in place for 25 years.
Electricity produced from the power plant will be sold to PLN, also for 25 years, to be distributed to areas in Sumatra and Java.
“We hope to sign a power purchase agreement with PLN this month and start the construction of the power plant next year,” Milawarma said.
PTBA has several other power plant development projects, including the 2×8-MW coal-fired power plant in Tarahan, Lampung. The power plant is expected to begin operations by the end of 2013.
The company is also working on the development of Banjarsari power plant, which will have a capacity of 2×110 MW and is expected to start operations in 2014.
Earlier this month, PTBA has enjoyed the operation of its 3×10-MW power plant in Tanjung Enim, South Sumatra. The company signed agreement to sell the plant’s excess power, nearly 6 MW, to PLN.
Investment of up to $638 million
China Huadian Group Co. , one of China’s five largest state-owned power generation enterprises, started construction of a coal-fired steam power plant in Indonesia’s Bali province on Tuesday, in a bid to ease the island’s electricity shortage.
The new facility, with a total investment of up to $638 million, sits in the north coast of the island and 120 km north of Bali’s capital Denpasar. Phase I of the plant has an installed capacity of 3x142MW and is expected to put into use in the first half of 2014.
“The independent power plant will cut the island’s electricity deficit and increase the stability of the grid,” said Deng Jianling, Vice President of China Huadian Group, on the commencement ceremony.
The new plant, which is equipped with clean and highly effective coal-fired power generation technology, is expected to be the biggest power producer in the island on completetion, according to Deng.
Henky, representative from Indonesian state utility Perusahaan Listrik Negara (PLN) said on the event, the poor infrastructure in Indonesia, especially the insufficient supply of electricity, has been the main hurdle to the country’s economic development.
Indonesia, the biggest economy in Southeast Asia, is current facing an electricity deficit.
“Investment from China is very important for the country’s development on infrastructure sector,” he added.
China has invested more than $7 billion in Indonesia’s power and infrastructure sectors since the establishment of the strategic partnership between the two countries in 2005, according to Chinese embassy to Indonesia.
China Huadian Group, serving as an independent power producer ( IPP) in this project, currently owns two controlling thermal power plant in Indonesia, the other one is in Batam. (Raras Cahyafitri, The Jakarta Post, http://www.globaltimes.cn/content/729771.shtml)