Medco to build $55m biomass plant in S'pore

Andi Haswidi ,  The Jakarta Post ,  Jakarta   |  Fri, 04/11/2008 12:32 PM  |  Business

Medco Energi Group is investing in a joint venture with Singapore's Biofuel Industries (BI) to develop a biomass cogeneration power plant in Jurong, Singapore, worth an estimated US$55 million.

The plant, the first of its kind in Singapore, will depend on horticultural and industrial wood waste as fuel and will be able to generate 25 megawatts of power.

"We signed an agreement with BI on Wednesday to establish a company called Biofuel Power, of which Medco will be the majority shareholder with 65 percent," said Fazil Alfitri, president director of Medco Power Venture (MPV), a subsidiary of Medco Energi.

BI chairman Er Kwong Wah said in a statement MPV had considerable expertise in developing, operating and maintaining power plants.

"We are pleased to enter into this agreement with Medco Power on this landmark development for Singapore," he said.

Last year, BI announced plans for a smaller biomass power project, worth $30 million with an output of 14.9 megawatts. The plans were dropped and replaced by the joint venture.

Construction will begin in the middle of this year and is scheduled for completion sometime in 2010.

"This is our first experience in developing this kind of biomass power plant," Fazil said.

"We want to turn this into a success story for the company, so that someday we can build one in eastern Indonesia, where there is so little access to energy."

According to Fazil, Singapore is seeking to reduce its dependency on gas by generating electricity and to manage its construction waste better.

He said BI approached Medco about the venture nine months ago.

In 2006, BI was granted a 30-year license to manage Singapore's industrial wood waste, which is estimated to reach between 700 and 800 tons by 2010.

Because the project relies on renewable energy, Fazil said, his company had hired a consultant to apply for a carbon credit certificate through the United Nations Clean Development Mechanism.

"According to estimates by officials from Singapore, the plant could generate up to 135,000 carbon credits a year," Fazil said.

Carbon credits are currently priced at an average of $10 per ton in the Asian market.

MPV is an investment company under Medco Group, through Medco Power Indonesia (MPI). The company's major business activities include a thermal power plant, a renewable fuel power plant and power plant services such as project management, operation and maintenance.

MPI owns majority stakes in and operates three gas-fired power plants in Batam with a combined capacity of 150 megawatts. The firm is currently developing a 330-megawatt geothermal power plant in Sarulla, North Sumatra.

In 2004, the Singapore government's investment arm Temasek was keen to buy a 38 percent stake in Medco Energi, but was forced to abandon the plan when the founding Panigoro family exercised its preemptive right to buy the shares.

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