T

he Japanese conglomerate Mitsubishi Corp says it has extended its business in Indonesia to include geothermal projects.

Mitsubishi, through subsidiary Diamond Generating Asia, recently acquired a 20 percent stake in independent power producer (IPP) Star Energy Geothermal, which operates the Wayang Windu Power Plant in Bandung, West Java.

The US$200 million acquisition was completed on Oct. 23 and reduced the ownership of old shareholder Singapore-listed Star Energy Geothermal Holdings Pte Ltd to 80 percent.

This is Mitsubishi’s first geothermal project in Indonesia, according to Taimei Watanabe, the assistant to chief representative of Mitsubishi Corp for Jakarta office.

“Geothermal is a very promising business field, especially in Indonesia. With the country’s strong economic growth and huge population, it means that demand for electricity is growing as well. This is also something that the government is focusing on now,” he said in Jakarta on Thursday.

He added that Mitsubishi acquired only 20 percent of Star Energy’s shares because it was learning how to run an IPP in Indonesia.

Prior to the Wayang Windu project, Mitsubishi ran IPP projects in Mexico, the Philippines, Taiwan, Thailand and the US. The company has also invested in at least 10 IPP projects in Europe through an investment fund in the Netherlands, according to Watanabe.

The Wayang Windu power plant has been in operation since 2000 and currently produces 230 Megawatts (MW) of electricity, all of which is distributed to state utility firm PT Perusahaan Listrik Negara (PLN). According to a regulation issued early in September, the government will pays 11 to 12.5 US cents per kWh of electricity obtained from geothermal sources in the Java, Madura and Bali regions.

While Star Energy plans on increasing its plant’s capacity to 420 MW, it has not yet established a timeframe for doing so, Watanabe said.

Indonesia was the company’s top foreign investment destination after Australia and Chile, Watanabe added.

Last year, Mitsubishi’s export and import businesses with Indonesia amounted to $6.4 billion, equal to 1.6 percent of Indonesia’s total trade in 2011.

In Indonesia, Mitsubishi runs six business divisions: energy, automobile, machinery, metal, chemical
and living essentials businesses. Its energy, automobile and machinery units were currently the
company’s three biggest divisions, Watanabe said.

Besides geothermal, Mitsubishi is currently involved in various energy projects, ranging from oil and gas to the mining sector. It has a 25 percent stake in the Kangean PSC project, a 10 percent stake in the Tangguh LNG project and a 44.9 percent stake in the Donggi-Senoro LNG project.

The firm has also been active in the local mining sector. As part of a consortium, Mitsubishi owns a 1.5 percent indirect stake in PT Indonesia Asahan Aluminium (Inalum), which runs an aluminum refinery in Asahan, North Sumatra. The government is currently considering buying out the consortium when its contract expires.

Mitsubishi also plans to invest in the Weda Bay nickel mining and smelting project in Halmahera, North Maluku. “We are still conducting a feasibility study. It is expected to be completed next year,” Watanabe said.

In automobiles, the company sold 130,000 vehicles last year, comprising 14.6 percent of total vehicle sales in Indonesia. Mitsubishi’s 2012 annual report, which covered the period ending in March, said that Indonesia was the most important market for its motor vehicle business division.

While trucks currently dominate the sales of Mitsubishi in Indonesia, the company expects to grab a bigger portion of personal vehicle market with the recent launch of the Mirage, its “low-cost” city car.

“Gaikindo [the Association of Indonesian Automotive Industry] predicts that total car sales will exceed 1 million units in 2013. We plan on increasing our sales in line with Gaikindo’s target estimation. As the number of people in the middle class rises, more and more people can afford to buy cars,” he said.

—JP/ Tassia Sipahutar