President Joko Widodo got an unexpected present on June 3 with the announcement by the Japan Bank for International Cooperation (JBIC) that it would, despite earlier doubts, fund the 2,000-MW Batang power station in Central Java, an essential part of his drive to add an additional 35,000 MW of capacity by the end of his first term in 2019. Getting Batang up and running is an essential step in keeping the lights on in the Bali-Java grid.
In the week before JBIC’s announcement, the president had been busy flying around the country, inaugurating or attending the groundbreaking of new power plants. He inaugurated the 184 MW Arun gas-fired plant in Aceh and a 100-MW plant in West Kalimantan, while in Bangka Belitung he attended the ground-breaking of a 50-MW plant and in Gorontalo he oversaw the start of work on a 100-MW gas-fired plant.
Everyone needed to do their part in getting the 35,000-MW power plant program up and running, he told the crowd in Gorontalo. “Every time I visit any regions, I have always asked about complaints. They gave the same answer: electricity, frequent blackouts,” he was reported to have said. “We will chase this issue, but we have to share work loads. Central government should assist in land procurement, for the construction to continue in the regions.”
Only a month earlier, then Minister for Energy and Natural Resources Sudirman Said admitted that progress on the power program had been less than spectacular. The president had ordered a review of the program, he said. “(Widodo) emphasized that there should be a thorough review while the deadline is still a long way off, so that we don’t encounter obstacles when we’re already halfway,” he told reporters.
“Investors and business people have started to question if we can finish this or not,” the minister admitted. While power purchase deals have been signed for around 30% of the projects, only 10% of the program was currently under construction, he said.
Despite the urging of the president during his tour of regional projects, few believe the target is achievable. Scott Younger, a partner at infrastructure consultants Glendale Partners, is blunt. “PLN hasn’t a snowball’s chance in hell of achieving 35,000 MW. They know it and so do thinking ministers.”
He adds that the figure of 35,000 MW of new power capacity is simply a statement of what needs to be done. “During the last government, it should have been doing 2,000 MW per year but only managed 720 MW in total over the whole period,” he told Concord Strategic. “There was no drive from the top and bureaucrats were not challenged.”
The result, he said, is that emergency supply measures will have to be taken, particularly off Java. “In eastern Indonesia they should be pushing ahead with solar.” And, he adds, the Land Acquisition regulation of February 2015 has yet to be tested in many areas.
It is not only critical observers who don’t think the target can be reached. Soon after he was appointed as Coordinating Minister for Maritime Affairs and Resources, Rizal Ramli created a stir when he questioned the wisdom of President Widodo’s power expansion program. In September last year, he went so far as to announce that the program was being scaled back by half.
“We have to look at everything factually and logically,” Ramli, who in late July was replaced by Luhut Panjaitan in Widodo’s second cabinet reshuffle, said at the time. “There is no way that 35,000 MW will be achieved within five years, but maybe we can in 10 years.” A target of an additional 16,000 MW by 2019 was more realistic, he said, adding that the initial plan was not viable because state-owned utility PLN did not have the ability to use all of the added capacity but would still need to pay for it.
Ramli immediately came under attack for changing the policy that the president himself had set in place. Within weeks, Widodo had demanded that the program be accelerated, not cut back. But in retrospect, the argument could have been avoided altogether. Nine months on and the 35,000 MW target seems entirely unrealistic.
The country continues to wallow in a host of red tape, with critics stating that the lack of separation between the agencies that create regulations and those that implement projects is part of the problem. At the same time there is too little coordination between bodies responsible for power creation and its distribution.
Rizal Djalil, a senior official at the State Audit Board, told a recent seminar that an audit of the government’s former “crash program” had found that the failure to construct 3,800 power pylons and 22 sub-stations meant that additional capacity could not be used. “PLN is still paying for the additional capacity but can’t use the power,” he said.
The crash program that crashed
As for the crash program itself, its dismal record suggests that it will be virtually impossible for Widodo to deliver on his promise of an additional 35,000 MW of power by 2019. Initiated in 2006, the so-called crash program aimed to build an additional 10,000 MW of capacity and was closely followed by another program of the same size to develop a similar amount of electricity, with more emphasis on renewable power sources such as geothermal.
At the end of the second term of President Susilo Bambang Yudhoyono, the government announced that the first of these programs would miss its end-2014 deadline, which had already been extended from the end of 2009. A ‘crash program’ that is more than five years late is certainly a misnomer.
In some respects, the crash program was counter-productive. Many of the coal-fired projects that were built went to Chinese firms, which paid little attention to the issue of pollution. Political sources say that the problems with the Chinese-built plants were the result of lobbying by Jusuf Kalla. In Yudhoyono’s first term he was, as now, the vice president, and he insisted that the crash program be opened to ‘second-level’ construction companies. That meant his own Haji Kalla Group and the related Bosowa Group were able to get some of the action, but so too were second-level Chinese firms.
At one Chinese-built power plant at Labuan in Banten province, the turbine cracked soon after start-up, necessitating a complete rebuild of the plant. Other plants such as that at Cirebon in West Java were so dirty that local communities were alienated and word spread that power plants meant trouble, hardening resistance to developments in other areas.
PLN is part of the problem. Komaidi Notonegoro, the executive director of Jakarta-based energy research group ReforMiner Institute, said in May that PLN had only recently submitted an electricity procurement business plan (RUPTL) to the government, six months behind schedule. And, he added, continuing difficulties with land acquisition meant the government’s target was unlikely to be met.
“Since the beginning, ReforMiner has warned that the program cannot be completed by using a business-as-usual approach. It needs a breakthrough in land acquisition and coordination with local governments to succeed,” Notonegoro told reporters on May 24.
Based on ReforMiner data, 113 power plant projects were constrained by land clearance issues in Bali, East Nusa Tenggara, Java, Kalimantan, Maluku, Papua, Sulawesi and Sumatra.
One of the problems with the 35,000 MW project is that most of them have not yet been included in provincial spatial plans (RTRW). According to Notonegoro, only 51% of the projects included were included in the RTRW in their respective areas.
One problem solved, another appears
Scott Younger, along with others, said he believes the Land Acquisition process is yet to be cleared up. That was the major stumbling block for one of the most ambitious projects in the country: the 2,000-MW coal-fired Batang project.
Construction was meant to begin in 2012 but it was repeatedly delayed as residents objected to the project because of fears it would pollute the atmosphere and destroy their livelihoods. Backed by local and international environmental activists and even the local branch of the Nahdlatul Ulama religious organization, they refused to sell their land.
President Joko Widodo rather optimistically broke ground for the plant in August 2015, despite some 20 hectares of the plant’s total concession still being withheld by residents. The government then exercised the 2012 Law on Land Acquisition for public infrastructure projects to seize the remaining land and assign compensation for residents in a district court. A last-ditch effort by residents to overturn the decision was rejected by the Supreme Court in February. The ruling proved that the Land Acquisition regulations can be effective.
A new problem emerged with the Japan Bank for International Cooperation (JBIC), which was supposed to fund the project, admitting that it was having cold feet. The Japanese parliament had been lobbied by conservationists, creating a tide of negative opinion in Japan itself. Bhimasena Power Indonesia (BPI), a joint venture set up by Indonesian coal miner Adaro Energy and Japan’s Itochu and Electric Power Development (J-Power), plans to build and operate the 2,000 MW Batang plant with funding from JBIC.
JBIC CEO Hiroshi Watanabe told reporters at the end of April that the bank had not decided whether to fund the $4 billion coal-fired power station project. He said on April 22 that “we haven’t decided to offer a loan to the project,” adding that “given what happened in Sakhalin, we understand we need to watch the local project construction contractor to ensure they do not harm the environment.” He was referring to the Sakhalin gas project, which hit severe production problems early this year, causing a bump in global gas prices.
On June 3, Reuters news agency reported that JBIC had made up its mind. It said in a statement that it had agreed on a $3.4 billion loan for the controversial project. JBIC will contribute just over $2 billion to the loan with other Japanese banks including Sumitomo Mitsui, Mizuho and Bank of Tokyo-Mitsubishi contributing to make up the total.
That should allow a start to begin on construction soon, assuming environmentalists do not have any more plans to disrupt the project. If they do, they are likely to face stiff opposition, with earlier reports stating that the Army had moved in to protect the site.
Concerns over environmental impact are also dogging plans to construct a second unit at the Cirebon PLTU with a capacity to generate 1,000 MW of electricity. That project, estimated to cost $2.1 billion, was also to be funded by JBIC. The first unit at the 660-MW Cirebon PLTU began operations in July 2012, and experienced an explosion in September 2014, causing injuries to several workers. Pollution levels were also reported to be high, upsetting the local population.
There is no doubt that there is interest, particularly from actors in the coal industry, to build new generating capacity, but it is the ability to get projects off the ground that remains the problem. A failure to produce even half of the new generating capacity by 2019 would leave the country in a situation in which it is continually striving to catch up with demand, without providing for the power requirements of new investors.
Some provinces, such as North Sumatra, are unable to attract new investment because of a shortage of power. The province is seeing its industrial base shrink as factories are forced to close because of the regional power crisis.
Power development is the single critical element in Indonesia’s attempts to get its economy moving at a faster rate. Without guarantees of reliable power supplies, Indonesia’s increasingly attractive conditions for investment are likely to be heavily discounted.
As the list below demonstrates, Indonesia is increasing development of solar- and wind-powered plants, particularly in eastern Indonesia. Solar power is seen as especially beneficial to remote areas where PLN distribution systems are absent.
Meanwhile despite intensive lobbying by proponents of the nuclear industry, both within Indonesia and overseas, the government appears to have put the nuclear option on the back-burner. Then Energy and Mineral Resources Minister Sudirman Said stated on December 12 that nuclear is not on the menu as part of plans to meet the longer-term goals of producing 136.7 gigawatts (GW) of new power capacity by 2025 and 430 GW by 2050. Said’s comments dashes hopes by regional governments in East Kalimantan and Bangka Belitung, which had been pushing for nuclear plant projects in their geologically stable provinces.
The government is also assuming that it can get a number of geothermal projects underway. However there is often considerable opposition to such projects, due to fears that they raise the risk of earthquakes and suck ground water up, to the detriment of farmers.
Those fears are largely based on long-outdated problems with the industry, which now uses closed cooling systems that don’t use large amounts of water. The fear of earthquakes is not based on anything more than irrational fears, with the industry operating for decades without problems.
Rationality does not always bring success. The Sorik Merapi project in Mandailing Natal regency in North Sumatra collapsed due to opposition from local elements who stirred up fears that the area to be affected would be destroyed. For the residents, arguments that the project was necessary to alleviate the province’s 300 MW electricity deficit, or that it would assist national development, were useless in the face of intense propaganda that their way of life would be dramatically altered.
The conflict between residents supporting the project and those against it ended in violence in January 2015 when a supporter was killed by a mob of hundreds stirred up by elements opposing the project. In March that year the central government said it fully supported the continuation of the project, but local officials pulled the operating license of the operator, a joint Australia-India-Indonesia consortium.
Indonesia is estimated to have abundant geothermal potential of up to 29 GW, of which only a small proportion has been tapped. The country aims to up its geothermal capacity by 4.9 GW by 2019, surpassing the Philippines and the US, the world’s second and first geothermal producers, with capacities of 1.9 and 3.4 GW each. The problem is how to achieve that in the face of poor coordination between central and local governments and extremely active interest groups who typically oppose geothermal projects.
Distribution systems must be improved
New power plants also require improved distribution systems. For that reasons, PLN’s requirement to build 10,000 MW of new capacity has been cut to 5,000 MW so that it can concentrate more on improving distribution systems. The World Bank has made a number of loans for the development of enhanced distribution systems, particularly in Sumatra. But there too, land acquisition is proving problematic.
Global power and automation technology company ABB Group has said it will support PLN to provide electricity infrastructure and boost supply in Java and Bali, a senior official said on June 1. ABB will help PLN to strengthen the efficiency of electricity transmission and distribution networks on the two islands as part of a three-year contract worth $11 million.
The Zurich-based company noted that Indonesia is likely to see higher power shortages in the future, with the country’s middle-class expansion predicted to drive greater electricity demand. The government has forecast that electricity demand is likely to rise by 9% on average per year over the next decade.
In the face of such calculations, a failure to get even half of the 35,000 MW program completed by 2019 will mean that supply will continue to chase demand. Many are pessimistic that even that goal can be achieved.
Below is a list of province-by-province programs reported by Concord until early June:
No plans have been announced for major power plant development in Papua. A Dutch government assistance program is reported to be building a pilot solar power project in the province. No details are available on the size of the pilot project but a spokesman said the overall project could produce about 50,000 kilowatt hours (kWh) of electricity per year.
Japan Gasoline Co. Ltd. (JGC) announced on March 18, 2015 that it planned to develop a 1,000- MW coal-fired power plant in Sorong. JGC Group chairman Yoshihiro Shigehisa said a first stage would see a 50-MW power plant developed at a cost of between $200 and $300 million. The proposed plant would use low-quality coal.
A micro-hydro power plant (PLTMH) in South Manokwari regency began supplying electricity to at least 200 homes in three hamlets in Ransiki district in December 2015. The project, when fully completed, is expected to supply electricity to around 800 homes.
The State-Owned Enterprises Ministry is taking over the construction of the long-delayed 2×15-MW steam power plant in Salahutu district, Central Maluku regency, State Enterprises Minister Rini Soemarno said on February 23. She said the construction would re-commence in June for completion in late 2017 or early 2018. The construction of the plant began in mid-2010 and had used Rp800 billion from the state budget until February 2016. The project has been hampered by unfinished clearing of 22.8 hectares of land. Allegations of corruption involving the main contractor also caused delays.
State-owned coal producer PT Tambang Batubara Bukit Asam plans to develop a 600-MW power plant to support a ferronickel smelter for fellow SOE PT Aneka Tambang in East Halmahera Regency, the company announced in January. A feasibility study is being conducted and construction is expected to start in 2018, with initial production estimated at 80 MW of power. Cost is estimated at between $720 million and $840 million.
Harita Group was reported to be building 3×40 MW of power plants in South Halmahera regency to support its $320 million nickel smelter. The project was expected to be completed in mid-2017.
The Energy and Resources Ministry was reported to be offering tenders for nine geothermal power projects in the province. They included the 265-MW Hamiding site and the 85-MW Telaga Rano site.
Bali’s electricity supply comes from various sources: 200 MW from a diesel power plant and gas power plant in Pesanggaran at Sanur; 130 MW from the Gilimanuk gas power plant; 170 MW from the Pemaron diesel power plant; and 200 MW from two underwater cables from Java. Additional underwater cables from Java were to be installed to deliver another 200 MW to the province. Electricity consumption on the island increases by 10% each year. The tourism sector, particularly hotels, consumes 55% of the island’s total supply.
The long-delayed Celukan Bawang power plant was completed in August 2015, providing an additional 380 MW of power. The $700 million coal-fired plant was constructed by China Huadian Engineering Co. Ltd., Merryline International Plt. Ltd. and PT General Energy Bali in a joint investment. Local government officials said the completion of the plant took the island’s total power capacity to 1,300 MW. In February nearby residents protested against the plant, demanding that an extra-high voltage transmission system (Sutet) be moved away from their villages.
East Nusa Tenggara
A consortium of South Korean investors has indicated interest in building geothermal plants in East Nusa Tenggara with a targeted investment value of $400 million (Rp6 trillion), the Investment Coordinating Board (BKPM) said on March 21.
President Widodo inaugurated the country’s biggest solar photovoltaic power plant in Oelpuah village in Kupang on December 27. The power plant is expected to be a benchmark in developing renewable energy. The 5-MW power plant commenced operations on December 8. During the inauguration ceremony of the plant, Widodo said similar technology would be introduced in remote regions that are inaccessible for coal-fired power plants.
German solar energy company Conergy is building solar power plants in East Nusa Tenggara in partnership with PT Buana Energy Surya Persada and PT Indo Solusi Utama. Three 1 MW projects will generate electricity to power 35,000 homes in Sumba, Ende and Maumere regencies, the company said in a statement on October 15. The projects were expected to be completed and be fully operational in the first half of 2016.
West Nusa Tenggara
The Nusa Tenggara unit of PLN will build two coal-fired power plants in Lombok with a capacity of 100 MW each. In Sumbawa power plants in Sumbawa regency and Bima will be built with a capacity of 50 MW each.
The government has earmarked an annual budget of Rp1.5 to Rp2 trillion until 2019 on the Indonesia Terang (Bright Indonesia) program, a combination of projects aimed at improving access to electricity in eastern regions including West Nusa Tenggara. The projects will provide electricity for 10,300 villages in six eastern provinces by 2019. New and renewable energy sources will be used to generate electricity for the villages, especially water and wind energy.
State-owned Indonesia Tourism Development Corporation (ITDC) agreed with state energy company Pertamina to start construction of a 50-MW solar power plant at Mandalika Resort project in southern Lombok. The company will develop the power plant in stages and targets it to reach full capacity by 2019. However, the company admitted in March that it had yet to secure a power purchase agreement with PLN. The power plant, which takes up to 50 hectares of land, will help supply half of the resort’s power demand, which is projected to reach 110 MW by 2025 to power hotels, a theme park, private villas and a race track in the complex.
Kurtubi, a member of the House of Representatives Commission VII overseeing energy affairs, said on February 13 that Indonesia is cooperating with the US to develop a wind power plant in West Nusa Tenggara. He did not specify the location or the size of the project.
PT Bosowa Energy began construction of a 300-MW coal-fired power plant in Jeneponto regency in March, which should cost around Rp4 trillion ($335 million). The new power plant will add to the capacity of Bosowa’s existing 2×125 MW coal-fired plants in the regency. Chinese companies will work with Bosowa on the project, according to the CEO of Bosowa Corporation, Erwin Aksa. Demand for power in the province is growing by an average of 10% per year.
The construction of Indonesia’s largest wind farm was scheduled to begin in South Sulawesi in May, Asia Green Capital Partners Pte. Ltd. announced on August 18. The Singapore-based clean energy developer said it was lining up financing for the 62.5-MW project, known as Jeneponto 1. The World Bank’s private investment arm Indonesia Finance Corporation will contribute to the project, estimated to cost between $120 million and $135 million, together with the Asian Development Bank and Denmark’s export credit agency EKF. Construction will take 18 months and a second 100-MW phase of the project called Jeneponto II will follow after Jeneponto 1 is completed.
President Joko Widodo on May 4, 2015 presided over the groundbreaking of construction for a coal-fired 2X100 MW plant in Takalar regency.
The Investment Coordinating Board (BKPM) announced on December 9 that PLN was ready to provide 900 MW of electricity to a major industrial area in Bantaeng regency. BKPM heady Franky Sibarani said nickel miners PT Huadi Nickel-Alloy and PT Titan Mineral Utama will consume most of the energy, which will be produced by two plants being built at the site. One coal-fired power plant is being built to generate 2×300 MW of electricity and another 1×150 MW plant will also be built, Sibarani said. The $1.1-billion 2×300 MW plant, being constructed by PT Bantaeng Sigma Energi, is expected to begin providing power to the industrial area in 2017.
A plan to build a 450-MW hydroelectric power plant on the Karama River in Mamuju regency has been shelved until at least 2024. A number of problems had forced the cancellation of the project, including resistance from local residents. The project was to be developed by Chinese state-owned firm China Gezhouba Group International Engineering, but met opposition from more than 22,000 people living in the districts of Kalumpang and Bonehau, whose areas were originally to be flooded to make way for reservoirs. The plan was altered to reduce its impact, but continuing opposition forced authorities to drop the $1.2 billion project.
The supply of power is unreliable, even in larger towns and cities. The province is currently facing an electricity deficit of about 65.8 MW and at least a fifth of households are not connected to the main power grid.
The province has initiated bidding for the construction of a 2×50-MW coal-fired power plant in Moramo district, South Konawe regency.
State controlled gold miner Aneka Tambang (Antam) said it would spend Rp447 billion to commission a 60-MW power plant at its Pomalaa site in Kolaka regency.
China-based PT VDNI plans to invest up to $5 billion in the Konawe Industrial Estate. Commenting on January 9, 2015, Andrew Zhu, CEO of the company, said a smelter project would be supported by a 335-MW power plant. Completion was expected by the end of 2017. However development of the project was delayed at the end of 2015 due to the lack of an environmental impact analysis (AMDAL).
The Sinar Mas Group’s energy and mining contractor Dian Swastatika Sentosa (DSSA) would build a coal-fired power plant (PLTU) in Kendari by 2018, the company announced in January. Kendari-3 will have a capacity of 2×50 MW.
The Bau Bau administration has begun producing electricity from a waste incinerator at the Wakonti waste disposal site (TPA). It produced 5,000 watts (0.005 MW) of electrical power during a trial phase.
The government is planning to build four compressed natural gas (CNG) power plants in the province with a combined capacity of 95 MW. The Southeast Sulawesi Energy and Mineral Resources Agency said the plants will be built in Kendari (50 MW), Bau Bau (30 MW), Bombana regency (10 MW) and in North Kolaka regency (5 MW). Construction in Bombana began in 2015 while construction of the other three was expected to begin in 2016.
Power shortages have resulted in a series of protests, with PLN offices the focus of occasionally violent demonstrations.
President Joko Widodo on December 8 inaugurated the use of the Karadeniz Powership Zeynep Sultan, a floating power plant, to supply electrical power for central and northern areas of Sulawesi, including Central Sulawesi. The marine power plant, owned by Turkish Karpowership, can produce 120 MW of electricity. It is the first of five vessels that will supply electricity to PLN. Power-plant vessels, according to Widodo, are the most suitable means of electricity generation to meet demand in the country, particularly in remote areas with poor infrastructure. The Karadeniz Powership Zeynep Sultan power-plant vessel will be in operation for five years and will use marine fuel oil, which is relatively cheap compared to diesel fuel. It is expected to help PLN save Rp350 billion per year.
The Energy and Mineral Resources Ministry announced on December 18 the geothermal power plant tender contracts for Marana in Central Sulawesi. The project has an estimated 36 MW of reserves and will support a power plant with 20-MW capacity. The bidding process was expected to be completed by mid-2016. Exploration is estimated to take around five years before construction of the power plant can start and the geothermal site is expected to start producing electricity in 2022. For Marana, the government has set a purchase price of 21.3 US cents per kilowatt hour (kWh).
The Zeynep Sultan floating power plant producing 120 MW of electricity was inaugurated at Amurang district in South Minahasa regency on January 31. The plant is owned and operated by the Turkish company Karadeniz Powership Co. It will supply power to North Sulawesi, Central Sulawesi and Gorontalo provinces and can be fueled by marine fuel oil (MFO) or liquefied natural gas (LNG). It was to begin to produce electricity using MFO before switching to LNG.
An agreement between PT PLN and private firms will see development of independent renewable energy power plants worth a total of $1.71 billion. The agreement includes development of the Sidrap wind turbine plant in North Sulawesi, which will supply 70 MW of power.
Former North Sulawesi Governor Sinyo Harry Sarundajang announced on March 23, 2015 that 11 power plants would be developed in the province. The projects include five micro hydroelectric power plants, in Lelipang, Sangihe Islands regency (0.5 MW); Duminanga; South Bolaang Mongondow regency (0.5 MW and 3.5 MW); Pidung, South Bolaang Mongondow regency (2 MW); and Ranowangko, Minahasa regency (2.2 MW). The government would also build at least two coal-fired power plants (PLTU) in North Minahasa regency (50 MW) and North Bolaang Mongondow regency (25 MW).
Reports in 2014 said PLN would build a gas-fired power plant in North Sulawesi to meet growing demand for power in the province and the provinces of Central Sulawesi and Gorontalo. The 150-MW power plant was to be built in Likupang district, North Minahasa regency.
State utility PLN started to operate a new 100-MW gas-fired power plant in Pohuwatu regency in February. Four 25-MW generator units were installed at the plant, although two were still to be tested.
PLN was also wrapping up work on Gorontalo’s main power grid, as well as the construction of six transmission towers with 150 kilovolts (kv) in capacity across a 1.4 km circuit.
President Joko Widodo early in June attended the groundbreaking of a 100-MW gas-fired plant in the province. He said it would take only seven months to complete.
Gorontalo will also benefit from the start of operations of the floating power plant Zeynep Sultan, which will produce 120 MW of power for central and northern areas of Sulawesi, including Gorontalo.
Before the recent additions to power supply, Gorontalo was experiencing an electricity deficit of around 60 MW.
The central government has allocated Rp22 billion for the construction of a gas-fueled power plant and biogas-fired power plants in North Kayong regency. The power plants will each have around 1 MW capacity, enough to meet most of the 5.4 MW electricity demand in the regency.
PLN has begun importing electricity from Malaysia through Sesco, the Malaysian electricity firm. The two countries’ power grids in Borneo have been connected and tests began on January 20. Power supply from Malaysia is being channeled through an extra-high voltage transmission system (Sutet) with a capacity of 275 kV. Sesco was to supply 10 MW of electricity in the first phase until March, when Sesco would then begin supplying 50 MW of electricity during off-peak hours and up to 230 MW during peak hours. The West Kalimantan-Sarawak power interconnected grid is part of the Association of Southeast Asian Nations (ASEAN) Power Grid project, which aims to achieve long-term security, availability and reliability of energy supply throughout the region.
A 160-MW power plant being built by PT Citra Mineral Investindo, a subsidiary of Harita Group, appears to have become a victim of the government’s ban on exports of unprocessed mineral ores. The company said in August 2015 it was unable to continue construction of a $2.28-billion bauxite smelter in Ketapang regency that would be served by the power plant due to the export ban.
The construction of the Sungai Ringin coal-fired 3×7 MW power plant in Sungai Ringin village in Sintang regency had reached 70% in February 2015. Construction of the Rp357 billion plant was expected to be completed this year.
The first unit of a 2×60 MW coal-fired power plant in Pulang Pisau regency began trial operations in late January. The second unit was expected to start trial operations in April. Once in full operation, the plant will cover 30% of the province’s 175 MW energy demand or 200 MW during peak periods. The development is part of provincial government efforts to add 400 MW to its power grid by 2017.
Other projects being developed jointly between the administration and PLN are a 2×100 MW coal-fired plant in Katingan regency, a 2×25 MW PLTU in East Kotawaringin regency and a gas-fired power plant in North Barito regency. According to reports in early 2016, all plants had been completed. Once in full operation, the province can produce 300 MW of electricity, well above its current needs.
The Energy and Mineral Resources Ministry on July 13, 2015 signed a memorandum of understanding with regional administrations in Central Kalimantan to kick off a biomass energy project on 63,000 hectares of degraded land in the Katingan and Pulang Pisau regencies. The project is the first biomass energy project that the government has established on what used to be mining land. The central government was also mulling similar projects in East Kalimantan, South Sulawesi, East Nusa Tenggara, Papua and West Papua.
The Central Kalimantan and Central Java governments were expected to conduct joint feasibility studies on a 350 km-long undersea power line connecting the two provinces. The undersea cable will be used to transfer electricity to Central Java from two projected mine-mouth power plants in North Barito and West Kotawaringin regencies. The power plants will have a combined capacity of 2×600 MW, former Central Kalimantan Governor Agustin Teras Narang said on May 27, 2015. Narang signed a memorandum of understanding (MoU) for the project with Central Java Governor Ganjar Pranowo in September 2014. Narang said Central Kalimantan, the country’s second largest coal supplier, has big deposits of low-calorie coal which is suitable for mine-mouth power plants. The officials did not specify a timeline for the feasibility study or the completion of the project.
East Kotawaringin regency was to distribute 200 solar power-generating sets to underdeveloped villages in the area, a Mining and Energy officials said on May 6, 2015. The villages are Tumbang Saluang, Tumbang Sapia and Lunuk Bagantung in Bukit Santuei district; Tumbang Puan and Luwuk Puan villages in Telaga Antang district and Kuluk Telawang village Antang Kalang district.
Publicly-listed coal miner Adaro Energy is working to close financing for subsidiaries Bhimasena Power Indonesia (BPI) and Tanjung Power Indonesia for a 2×100 MW power plant in Tanjung, Tabalong regency. Adaro Energy and its South Korean partner Korea East-West Power have secured $540 million in financing from five banks for the plant. DBS Bank, Mitsubishi UFJ Financial, HSBC, Mizuho Bank and Sumitomo Mitsui Banking formed a syndication to provide $400 million guaranteed by Korean Trade Insurance Corporation. Korean Development Bank provided the remainder. The plant is expected to be online by 2019.
The government of East Kalimantan has issued a regulation requiring coal mining and oil and gas companies to each build a power plant. Governor Awang Faroek Ishak said Governor’s Regulation No. 17 of 2015 will affect companies already operating and planning to invest in the province. The administration will not issue or extend a permit for companies that fail to comply with the regulation. He applauded Berau Coal as the only company to show a commitment to support local development with a plan to build a 2×100 MW power plant. The company has struck severe debt problems and the future of the power project is uncertain.
The Malaysian government has expressed interest in building a 400-MW coal-fired power plant in Sebatik Island, Nunukan regency, North Kalimantan Governor Irianto Lambrie said on May 6. The plan was proposed by the government of Sabah, a state in Malaysia bordering North Kalimantan. Lambrie said he welcomed the proposal and said his administration would facilitate the issuance of permits for the construction, which could be undertaken by a consortium involving local companies. Lambrie estimated the cost of the plant at $400 million.
Sarawak Energy Bhd. (SEB), a company owned by the state of Sarawak in Malaysian Borneo, signed a letter of intent with the North Kalimantan administration on April 26 to explore energy partnership opportunities. North Kalimantan Governor Irianto Lambrie said after the signing that SEB’s experience could help North Kalimantan develop its hydropower potential of 15,000 MW. Lambrie said North Kalimantan could also learn from Sarawak’s use of coal, oil and gas to ensure a steady power supply.
The government asked PT Kayan Hidro Energi (PT KHE) to modify the design of a proposed 6,000-MW hydropower plant in Kayan district, Malinau regency to prevent flooding after five districts in the vicinity were inundated in March 2015. After meeting with regional officials, a director of PT KHE on March 18, 2015 said the company will coordinate with regional agencies to change the size and location of the projected dam. The Director General of Electricity at the Energy and Mineral Resources Ministry, Jarman, on January 18, 2014, said that the hydropower plant would represent the first stage of an expanded development project. The project was planned to be operational in 2018. A number of Chinese investors are supporting the mega-project on the Kayan River. It will form the basis of a plan to develop other industries, with several mineral processing plants, cement plants and an industrial estate to be built around the plant site. In October 2014, Friends of the Earth (Wahli) called for the PLTA to be scrapped, saying that the plant would displace hundreds of people living in Long Peleban and Long Leju villages in Long Peso district and have negative consequences for the environment.
PLN warned on August 13, 2014 that the decline in the electricity reserve margin in the Java-Bali grid would reach an alarming level in 2016, earlier than a previous forecast set for beyond 2018, as delays in the operation of several key power plants were expected to curb supply amid soaring demand from industry. PLN director for construction Nasri Sebayang said the reserve margin was at that stage hovering at 27%, already lower than the ideal level of 30%. According to the company’s projections, the margin in Java-Bali would plunge to 18% in 2015 and to 16% in 2016 and 2017. Given such low margins, PLN might have to implement rolling blackouts.
A consortium led by state construction company Wijaya Karya (Wika) was seeking to secure loans of up to Rp25 trillion ($1.7 billion) to build power plants in Banten, a report said on September 9. Wika corporate secretary Suradi said the power plants, Java 5 and Java 7, would have a total capacity of 4,000 MW and cost about Rp35 trillion. Wika would work with China Nuclear Group Engineering Corporation (CNEC) and a local firm, Sumber Segara Primadaya, to build the plants. Suradi also said that the consortium might apply for a loan from the China Development Bank (CDB), which would be disbursed through state-owned lenders. However in May PLN cancelled the tender for the construction of the Java 5 coal-fired power plant in Serang, one of the biggest projects on the government’s books. PLN president director Sofyan Basir said the decision was reached following a board of directors’ meeting after finding the tender process did not meet the company’s procedures and good corporate governance (GCG) principles. Basir’s brief explanation, while raising many questions, points squarely at corporate governance issues, and his comment that the move is to protect the public strongly suggests that some dirty work was afoot.
PLN is set to start construction on a new 315-MW coal-fired plant in Banten, which is targeted to reach completion in three and a half years. PLN on September 18 last year signed an engineering, procurement and construction (EPC) agreement for the plant with a consortium made up of Japan’s Sumitomo Corporation, global engineering firm Black and Veatch International and Jakarta-based Satyamitra Surya Perkasa. PLN corporate secretary Adi Supriono said in a statement that the plant is expected to supply power to Jakarta and the surrounding areas along the Java-Bali electricity grid. The plant is being built near the existing 3×315 MW coal-fired PLTU 3 Banten Lontar power plant.
PT Lestari Banten Energy, a joint venture between Lestari Listrik and Hero Inti Pratama, has begun building a 660-MW coal-fired power plant in Serang regency. A company official said the company will spend $1 billion on the project. Forty percent of the work had already been completed, it said recently.
Diversified petrochemical company PT Barito Pacific plans to build a 150-MW power plant near its industrial compound in Cilegon with an initial investment of around Rp4 trillion ($317 million). President director Agus Salim Pangestu said on March 7, 2015 that the company had not yet decided whether it would build a coal-fired or gas-fired power plant, although the funds had already been allocated for the project. Pangestu said the firm was still surveying the scale of the project, acknowledging that the firm was leaning toward building a power plant of about 1,000 MW. The plant is expected to start operation by 2019, after groundbreaking in 2016.
No plans have been reported for the construction of major new power plants in the city, where a number of large plants already exist.
The government is planning to establish waste-powered electricity plants in eight big cities including Jakarta within two years, Coordinating Minister for Maritime Affairs Rizal Ramli said on May 31. The minister said a previous plan to develop a waste-fueled power plant was hampered by the low price of electricity. The average price of electricity in Java is only $0.06 per kilowatt hour (kwh), which is considered too low for power from a waste-powered plant. Ramli said President Widodo issued a decree in March that specifies a new rate of 18.5 cents per kwh. Ramli claimed that the break-even point of waste-powered electricity plants was 14 cents to 16 cents per kwh. About 10 cents of that could be allocated for waste management, while the remainder would cover electricity generation.
Chevron is reported to be looking to sell geothermal assets operated in the province by two subsidiaries. The Salak and Darajat fields have a combined capacity of 647 MW. State energy company Pertamina, which already owns a minority stake in the Darajat operation, has expressed interest in acquiring the assets. Medco Power, controlled by Saratoga Capital and Medco Energi Indonesia, have also stated their interest, but Saratoga is understood to be keen to sell its stake in Medco Power, with two Thai energy companies in the bidding.
A consortium of state energy firm Pertamina and Japan’s Marubeni signed an agreement with General Electric (GE) for the supply of gas turbines for a $2 billion power plant in West Java. The Pertamina-Marubeni consortium is planning to bid to build and operate the 1,600-MW Java-1 plant, which would be the biggest gas and steam power station in Indonesia, Pertamina said in a statement on March 13. GE would provide the widely used 9HA combined-cycle gas turbine which is able to improve power generating efficiency by 61%. A tender for the project was being prepared by the consortium with state-owned utility company PT PLN scheduled to open the tender in May. The consortium has also asked South Korea’s Samsung C&T Corp to provide engineering, procurement and construction for the power plant, Pertamina said. It did not give any financial details.
PT Cikarang Listrindo, an independent power producer for the Jababeka Industrial Estate in Bekasi planned to raise $300 million from an initial public offering (IPO) in June, aiming to increase power generation capacity to serve companies in its industrial estate.
The Japan Bank for International Cooperation (JBIC) has agreed on a $3.4 billion loan for the controversial coal power project in Batang regency, Central Java, after years of delay, the publicly funded Japanese bank said on June 3. JBIC will contribute just over $2 billion to the loan to fund the 2,000-MW coal-fired power plant. Other Japanese banks including Sumitomo Mitsui, Mizuho and Bank of Tokyo-Mitsubishi are also joining the loan, JBIC said in a release. Financial closure of the loan for the power plant had been delayed two months, just one of many hitches for the project. The Supreme Court had earlier thrown out a landholders’ lawsuit on technical grounds, paving the way for the government to take over the remaining land for the project. Construction was meant to begin in 2012, but has been repeatedly delayed as dozens of landowners refused to give up their paddy fields for the power plant. PT Bhimasena Power Indonesia (BPI), a joint venture set up by coal miner PT Adaro Energy and Japan’s Itochu Corp. and Electric Power Development Co. (J-Power), is building and operating the project.
Then Energy and Mineral Resources Minister Sudirman Said stated on March 5, 2015 that investors building a 5,000-MW power plant in Cilacap were still acquiring land for the project, although reports said most of the land for the project belongs to the local administration and the Armed Forces (TNI). Completion of the first stage, which will produce 2,000 MW, is expected in 2018, with the entire project to be competed in 2022. The plant is to be built by PT Jawa Energy, backed by Chinese investors.
State-owned oil and gas firm Pertamina secured rights to build a geothermal power plant at Mt. Lawu, located on the border of Central Java and East Java. Pertamina is offering an electricity rate of $0.10 per kilowatt hour (kWh) for power produced from the plant. The Mt. Lawu geothermal power plant will be developed by Pertamina’s geothermal subsidiary, PT Pertamina Geothermal Energy (PGE). The Mt. Lawu geothermal working area, estimated to support up to 165 MW in output, stretches across two provinces and several regencies – Karanganyar, Sragen and Wonogiri in Central Java, as well as Ngawi and Magetan in East Java. PGE plans to begin work on an exploration survey, evaluation of moves to determine drilling coordinates and preparations for exploration drilling, including obtaining permits.
PLN in mid-December signed power purchase agreements and construction contracts with independent producers, including the $4.1 billion 2,000-MW expansion of Tanjung Jati B in Central Java, carried out by a consortium of local heavy machinery and mining firm United Tractors and Japanese partners Sumitomo Corporation and Kansai Electric Power. Unitra Persada Energia, a unit of United Tractors, joined the partnership as a minority partner the same month. UPE and Kansai Electric both have 25% interests while Sumitomo owns half. The expanded capacity of 2,000 MW is due to come on line in 2020.
State-run gas distributor PT PGN began supplying gas to the Tambak Lorok 1,000-MW combined-cycle power plant in Semarang through the 207-km Kalimantan-Java Pipe I (Kalija Pipe I), PGN spokesman Irwa Andri Atmandto said on October 10. The Tambak Lorok plant began to produce electricity on September 8, 2014 after a three-year hiatus after the failure of gas supplies from a nearby block.
Yogyakarta will provide a 270-hectare plot of land in Gunung Kidul regency to be used as a solar power plant. Governor Sri Sultan Hamengkubuwono X on February 12 signed a memorandum of understanding on the project with Indonesian energy company PT Medco Inti Dinamika president director Hilmi Panigoro, head of the Technology Assessment and Application Agency (BPPT) Unggul Priyanto and PT Len Industri president director Abraham Mose. Panigoro said his company will work with BPPT to develop the plant. Priyanto said the use of solar panels manufactured in Indonesia should take priority given the country’s abundance of silica sands, which are used to manufacture solar cells. He also said a power purchase agreement must be signed with PLN ahead of construction.
PLN is scheduled to commence the construction of several new power plant projects, reports said on August 6, 2015. The projects include a combined-cycle power plant in Grati, Pasuruan, East Java. Iwan Purwana, head of the strategic procurement division for PLN, said the Grati power plant would have capacity of 450 MW.
MAXpower Indonesia, the local unit of Singaporean energy firm MAXpower, on March 23 2015 signed a joint venture agreement with Lamong Energi Indonesia. The companies were to work with state-owned port operator Terminal Teluk Lamong and state-owned builder Adhi Karya to construct a gas-fired power plant to serve the Terminal Teluk Lamong Industrial Port in Surabaya. The power plant was scheduled to be in service by the end of 2015, Arno Hendriks, MAXpower’s chief executive, said in a statement. No further reports have been received on the project’s status.
AKR Corporindo said in November 2014 it had earmarked up to $1.5 billion for the construction of two power plants to supply energy needs in its industrial estate in Gresik regency, East Java. AKR president director Haryanto Adikoesoemo said his company planned to start development of the plants in 2015 with completion scheduled for 2018. The 2×300 MW plants will supply the company’s Java Integrated Industrial and Port Estate (JIIPE), generating additional income for AKR from energy sales. One of the power plants will be fueled by natural gas, while the other will be coal-fired.
An additional 1,290 MW is planned to come online from new power plants in Sumatra in 2016, including 655 MW in the southern part of the island. In 2015, Sumatra increased its capacity by 1,340 MW with the addition of several power plants, including Keramasan, Keban Agung and Sumsel-5 in South Sumatra, which began trial operations in November.
Lampung’s energy generation capacity is currently 832.2 MW, of which 52% is generated by coal, 19% by diesel, 14% by hydropower and 13% by geothermal. The province expects to generate 994 MW by 2017. However several plantation firms in Lampung are withholding land needed for a power transmission project, depriving the province of crucial electricity supply, PLN said in a statement on March 4. The transmission project began in 2007 and aims to connect South Sumatra, which has a 436 MW energy surplus, with Lampung, where frequent outages occur. PLN has completed half of the towers in the project. Lampung is reportedly short of 300 MW of power to meet peak demand.
Hong Kong-based coal miner China Shenhua Energy Co. Ltd., a subsidiary of the Chinese state-owned Shenhua Group, will build a 700-MW coal-fired power plant in Lampung. The company and the Lampung administration signed a memorandum of understanding (MoU) in January 2015 to build 2×350 MW mine-mouth power plants in Mesuji regency. Cong Guin, a representative from the Chinese company’s Guohua Electric Power Branch, has promised that the development will be environmentally friendly and meet high standards of security, efficiency and advanced technology.
PLN’s Lampung branch said it would continue development of power plants in the eastern part of Sumatra, including Sribawono and Labuhan Maringgai in East Lampung regency, despite delays in licensing from the regional administration.
Pertamina Geothermal Energy (PGE) is working on Unit 3 and 4 of the Ulubelu project in Lampung, each with a capacity of 55 MW. PGE planned to complete the Ulubelu units by August 2016 and June 2017 respectively. Once they enter operation, Ulubelu’s four units will produce a combined 220 MW.
South Sumatra’s reserve margin of power stands at 15%, lower than the 30% considered safe to prevent blackouts, the Sumatra regional director of PLN, Amir Rosidin, said on January 14. Rosidin said Sumatra is likely to see electricity sales grow by 8% in 2016.
The provincial government in March was to begin building a 10 MW solar-powered power plant (PLTS) in Jakabaring district, Palembang to supply electricity to infrastructure for the 2018 Asian Games facilities.
PT Sampoerna Agro inaugurated two biogas-fired power plants in Komerling Ogan Ilir regency on December 17. The plants have a total capacity of 4 MW. The company will extract methane from decomposed palm oil liquid waste. The two biogas plants supply electricity for 20 villages and over 2,000 families in the regency.
The Way Ratai geothermal project in the province was one of three nationwide offered by the government in December. The site covers 70,710 hectares and has an estimated 105 MW of reserves. Under the plan, a power plant in Way Ratai would produce an estimated 55 MW.
State-controlled coal miner PT Tambang Batubara Bukit Asam began construction of its long-delayed mine-mouth power plant in Muara Enim regency on November 7. The $1.6 billion plant, named Bongko Tengah or Sumsel 8, will have a total capacity of 1,240 MW once completed in 2018.
The first unit of the Sumsel-5 coal-fired power plant was connected on November 1, marking the start of tests of the newly-completed power plant. The plant, built by Sinar Mas Group’s energy and infrastructure holding company Dian Swastatika Sentosa, has two units of 150 MW each. It is estimated to have cost about $420 million.
A joint venture between local listed miner Intraco Penta and Hong Kong’s Sinohydro secured power purchase agreements from PLN for the company’s 200 MW power plant in Bengkulu. The joint venture, Tenaga Listrik Bengkulu, would need investment of $360 million and the coal-fired power plant is expected to be completed by 2019, PLN said in a statement on November 25, 2015. Intraco owns 30% in TLB with Synohydro controlling 70%. TLB said the power plant could save Rp1.7 trillion ($123 million) annually by avoiding purchase of power from the Sumatra grid.
The North Bengkulu administration will collaborate with Chinese investors to build a coal-fired power plant to overcome power shortages in the region. North Bengkulu regent Imron Rosyadi said on July 31, 2015 that the facility will use palm oil shells instead of coal. The regent did not provide a timeline for the project.
A consortium of Japan’s Mitsubishi, Takafuji and the country’s Industry and Energy Ministry have agreed to build 10 plants in separate parts of the province to process wood waste into a renewable energy source as a substitute for coal. Deputy Governor Sultan Bachtiar Najamuddin said on 16 June 12, 2015 that the consortium will invest up to Rp1 trillion in each plant.
Pertamina is exploring the possibility of developing geothermal energy projects believed to be capable of producing 300 MW of electricity in the regencies of North Bengkulu, Rejang Lebong and Lebong, the Bengkulu Environmental Agency said on October 3, 2014.
The West Sumatra provincial administration plans to phase out fossil fuel-based power plants with the construction of geothermal and hydropower plants, with a goal of generating 375 MW by 2019, a report said in May 2015. West Sumatra’s current power demand is 480 MW during peak load and around 10% less during normal periods. The current installed power output is 550 MW, supplied by hydropower, coal and diesel power plants, said provincial Energy and Mineral Resources Agency official Heri Martinus. Diesel power plants and coal-fired power plants would be phased out and left on standby. On May 14, 2015, Martinus said PT Supreme Energy in South Solok was expected to begin supplying 250 MW from its geothermal power plant and 125 MW from its mini-hydro plants. He said the combined 375 MW will be enough to replace diesel and coal energy. The West Sumatra Energy and Mineral Resources Agency has also mapped out potential sites for 54 mini-hydro plants that could produce 485 MW. However the severe dry season in 2015 caused a water crisis that forced PLN to implement rolling blackouts from January to November 2015 as hydro power plants were unable to operate.
The Padang administration was to begin operation of a methane power plant at the Air Dingin landfill by early 2016, a report said on January 21. The methane power plant is a pilot project and aims to use the gas produced from garbage to generate electricity. Padang’s sanitation and parks office hoped to generate 130,000 KvA of electricity.
The Chinese government has expressed interest in investing in renewable energy and infrastructure development in West Sumatra, a report said on August 2, 2015. China’s consul general Zhu Honghai said West Sumatra has undeveloped renewable energy resources potential. West Sumatra Governor Irwan Prayitno said the region has a huge geothermal energy potential. Around 17 geothermal sites are available and can generate up to 1,650 MW of power.
A number of power generation plants are being built in Jambi, including the Kerinci hydropower plant, a gas-powered plant at the Gelam River in Muaro Jambi regency and a geothermal power plant at the Penuh River in Sungai Penuh city. Jambi 3, a 100-MW power plant in Jambi, is currently being tendered.
PLN said on May 27, 2015 that the Tanjung Jabung gas-fueled power plant in West Tanjung Jabung regency would begin operating at the end of 2016. PetroChina International Jabung on November 15, 2013 reached an agreement with the West Tanjung Jabung regional administration to supply gas to the plant. PetroChina said the company will provide 2.5 mmfd of gas to the plant once it enters operation and help boost power supplies and curb frequent blackouts in the regency.
A project to build a $750 million 400-MW coal-fired power plant in Tebo regency remained stalled three years after its announcement, reports said on July 13, 2015. Residents of the regency continue to suffer regular blackouts due to electricity shortages. Reports in September 2014 said the project was to be handed to private companies. Former Governor Hasan Basri Agus and the president of Korea South-East Power (KOSEP), a grouping of investor companies, on October 11, 2013 signed the agreement for the construction of the plant. Construction was expected to commence in mid-2014 but delays in permits pushed a start date back.
Plantation group Asian Agri in a statement on January 25 said it had begun to operate five power generation plants fired by biogas from palm oil mill effluent (POME). The POME-based biogas power generation stations are based in North Sumatra, Jambi and Riau, each with an installed capacity of 2 MW. The plant in Jambi is located in Lubuk Bernai village, Batang Asam sub-district, West Tanjung Jabung regency. Asian Agri plans to build 15 more biogas power stations with the same capacity within the next 10 years.
President Widodo in early June presided at the ground-breaking of a ‘mobile’ 50-MW plant on Bangka Island.
PT PLN in April 2015 said the electricity supply in the province was 160 MW. The company said it was working on an undersea electricity grid connecting West Bangka, Central Bangka and South Bangka regencies with South Sumatra.
Former Coordinating Maritime Affairs Minister Indroyono Susilo said during a visit to Belitung on March 14, 2015 that new power stations had been built to support tourism development. Trial operations had been conducted at two 16 MW power stations and they were expected to enter operation immediately.
Bangka Belitung Governor Rustam Effendi on May 18, 2015 invited investors from China to invest in power generation in the province to avert an electricity crisis. He told reporters that investors have expressed their readiness to build power plants with a combined capacity of 700 MW, comprising 500 MW in Bangka island and 200 MW in Belitung island. Effendi made the remarks after meeting with seven representatives of China Harbour Engineering Co. Ltd. to work out the locations and certainty of the projects. Power shortages have forced the local office of PLN to introduce rotating blackouts.
State construction company Waskita Karya secured a Rp6.6 trillion contract to build 410 km of power transmission lines to connect Jambi and Riau, the company’s finance director Tunggul Rajagukguk said in late January. Construction of the lines would be completed in three years.
PLN secured syndicated loans to support the development of a coal-fired power plant in Riau, reports said on November 14. The syndicated loans involve seven banks and one state-owned firm, namely Bank DKI, Bank Jateng, Bank Aceh, Bank Kalteng, Bank Riau Kepri, Bank Kalbar, Bank Pembangunan Daerah Bali and PT Sarana Multi Infrastruktur. The loans, amounting to Rp2.2 trillion, have a 10-year tenor. They will be used to develop a 2×110 MW power plant and will be guaranteed by the government, according to PLN. The 2×110 MW Riau power plant is the last coal-fired power plant under the former government’s first crash program that has yet to receive financing.
PD Pembangunan Pekanbaru, a regional-owned enterprise in Riau, will team up with PT Indojaya Nusantara Investama to build a 420-MW gas-fired power plant in Tenayan, Pekanbaru, CEO Heri Susanto said on January 5, 2015. The power plant will be built on a 10-hectare area of land, with total investment estimated at Rp3 trillion. Susanto said the two companies have agreed to form a joint venture, PT Sarana Pekanbaru Energi, of which 90% of the stake will be owned by Indojaya as the sole investor in the project. A construction plan was submitted to PLN, Susanto said, adding the permit issuance process usually takes up to four years. The joint venture has signed a memorandum of understanding (MoU) with state gas company PT PGN to secure gas supply of 40 million standard cubic feet per day (mmscfd). Riau sees the highest increasing demand for electricity in Sumatra, averaging 11% annually, as the province books over 9% growth every year.
Shandong Nanshan Aluminum Co., China’s second-largest aluminum producer, is scheduled to break ground on the first phase of its $2 billion manufacturing complex in Bintan Island in October 2016. In December, interim Riau Islands Governor Agung Mulyana said the company was set to build a smelter, dams and a 2,800-MW power plant to produce aluminum ingots, powder, foil and sheet, adding a 2,000-hectare industrial complex in Bintan would be established and the company would source bauxite from Kalimantan. Excess power supply of 300 MW would be sold to PLN.
US-based General Electric (GE) signed four infrastructure projects valued at over $1 billion in the power, oil and gas and healthcare sectors, the company said in a statement on October 26. The deals include one for GE to build a 500-MW gas turbine power plant in Batam.
The province is estimated to have a 300-MW power deficit. Shortages of energy have been blamed for around 2,000 job losses in industries in the province.
Singapore-based KS Orka Renewables signed a deal to take over the 240-MW Sorik Marapi geothermal power plant project in North Sumatra from Australia’s Origin Energy and Indian power producer Tata Power International, it said in a statement on April 11. KS Orka will acquire a 100% stake in OTP Geothermal, a joint venture between Origin Energy and Tata Power that has a 95% stake in Sorik Marapi Geothermal Power (SMGP), an Indonesian company that holds the license to develop the power plant. Indonesian oil and gas company Supraco has the remaining stake in Sorik Marapi. OTP Geothermal has had little success in its exploration program due to resistance from local residents.
US-based APR Energy, in an open letter to residents of Nias on June 3, said it had decided to keep supplying power temporarily while it waits for PLN to pay its debts. “APR Energy has decided to continue to support the people of Nias by keeping the power on through June 11,” John Campion, APR Energy CEO, said in the open letter. “In return, we expect PLN to honor its commitments to pay monies owed to our company, to provide necessary support as APR Energy demobilizes our plants and to provide a smooth transition of power generation to the people of Nias.” PLN has allegedly failed to pay its $2.04 million debt to APR Energy, which manages 2×10 MW power plants on the island. APR Energy suspended operations for 12 days from March 31 until PLN paid a portion of the outstanding amount. According to APR, PLN still owed the company $950,000 as of May 17 from previous operations.
State-owned aluminum maker Indonesia Asahan Aluminum (Inalum) has allocated up to $2.5 billion to finance a number of projects in order to help achieve a target of producing 500,000 tons of aluminum by 2020, a report said on October 16. The projects include a 1,000-MW steam-fueled power plant. Inalum president director Winardi Sunoto said the power plant would break ground this year and would take two to three years to build. Under an agreement signed in 2007, Inalum transferred 90 MW of power to PLN. With the worsening of the power supply crisis in the province, the government ordered Inalum to increase its transfer of power to PLN to 210 MW. Inalum relies on hydro power plants Asahan I and Asahan II, which have a combined capacity of 604 MW, for its main supply of energy.
President Widodo inaugurated the 184-MW Arun gas-fired plant in Aceh in early June. Arun was initially a LNG plant run by ExxonMobil but the project exhausted the gas reserve. Rather than dumping expensive infrastructure, the facility was turned into a gas storage unit. That unit feeds the new power plant as well as fertilizer factories and other gas-based industries.
Investors from France agreed in November 2015 to build a hydropower plant with a capacity of 59 MW in Sikundo hamlet, Pante Ceureumen district, West Aceh regency, at a cost of $50 million. The project is being developed by a consortium, Aceh Hydro Power, which includes PLN and one of its subsidiaries.
Diversified energy and resources company PT ABM Investama plans to invest as much as $200 million in a 100-MW power plant in Aceh, the company said in March 2015. The move represents a shift from the company’s original core focus of coal mining. ABM has allotted a 40-hectare area of land in its coal mining site in Aceh for the power plant.
Governor Zaini Abdullah has said the Aceh provincial administration wants to attract foreign and local investors to the province’s geothermal energy sector and is targeting a total of Rp42 billion in investments by 2017. Aceh is estimated to have geothermal reserves of around 1,115 MW across 17 locations in eight districts.
A version of this article was first published by Concord Review on June 8, 2016. Free trial subscriptions are available.
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