Business

Medco Power, ABM Investama
eye more mini-hydro projects

PT Medco Power Indonesia says it wants to develop mini-hydro projects to produce a combined 50 megawatts (MW) a year, while Jakarta listed integrated energy company PT ABM Investama (ABMM) wants to produce 20 MW from mini-hydro power projects.

Medco Power Indonesia, which is 51 percent owned by PT Saratoga Power and 49 percent by listed oil and gas company PT Medco Energi Internasional, has been working on a 10 MW mini-hydro project in Sukabumi, West Java, according to president director Fazil Alfitri.

“However, we are about to sign four more contracts with construction firms for other development projects in West Java and South Sulawesi. Therefore, our portfolio will be 50 MW this year,” Fazil said, adding that the firm wanted to produce around 120 MW from mini-hydro plants in the future.

“There is potentially 500 MW in mini-hydro [power] in Indonesia, Fazil said. “However, not many companies are in the running for such projects.”

He expected that the mini-hydro plant in Sukabumi would be operational by October.

Fazil said that Medco Power had set aside US$20 million for mini-hydro development this year as part of $135 million in capital expenditures for 2013.

Although state electricity company PT PLN agreed with Fazil’s assessment of 500 MW for the archipelago’s mini hydro-power potential, the current capacity of plants operated by PLN and private firms tops only 36 MW.

PLN said in a report that the total planned output from mini-hydro power plants that were operational or in development that had signed power purchase agreements (PPAs) was 211 MW as of the end of last year.

Plants that would produce 138 MW were currently under construction by private firms according to PLN.

The state power firm previously said that it wanted annual national hydropower production from all sources, public and private, mini or otherwise, to top 12,000 MW by 2025.

As much as 65 percent of the plants needed to produced the 12,000 MW would be built by PLN, with the remainder slated to be developed by independent power producers.

Besides Medco Power, ABMM is planning to increase its portfolio in renewable energy, including energy from mini-hydro power plants.

ABMM’s director for corporate strategy, Yovie Priadi, said that the company, through its wholly owned subsidiary PT Sumberdaya Sewatama, was currently conducting studies to develop mini-hydro projects that would produce about 50 MW.

“We have finalized on 5 Megawatt and 10 Megawatt projects in South Sulawesi. We hope to sign PPAs with PLN this year so that we can continue with the construction contracts,” Yovie said.

Yovie said that ABMM would develop the projects with other firms and the local administration. “However, we want to have a majority stake, which is at least 51 percent,” he said.

The development of a mini-hydro plant would require around $2 million per MW, according to Yovie.

According to Yovie, there was an annual production potential of around 200 MW for mini-hydro developments in South Sulawesi.

Mini-hydro projects are one of ABMM’s efforts to increase its capacity to provide power.

ABMM’ subsidiary Sumberdaya Sewatama currently has an annual production capacity of 1,000 MW, 95 percent of which comes from temporary power generators.

“In the five years ahead, we want to see the temporary and IPP’s portfolio be more balanced, at around 60-40. Sewatama is seeking capacity growth of 10 to 15 percent per year in the temporary power business, and 50 to 100 MW in IPP per year” including gas, coal and mini-hydro, Yovie said.

ABMM reported $886.97 million in revenue in 2012, an almost 18 percent increase compared to $753.83 million a year earlier. About 60 percent of the total revenue reaped in 2012 came from mining contractors and coal mining services business.

Power engine rentals, run by Sumberdaya Sewatama, contributed $133.33 million, or around 15 percent to total revenue, while its power engine rental business saw about 18 percent growth over 2011.

Although its revenue grew, ABMM’s net profits dropped by around 75 percent to $13.64 million in 2012 from $55.53 million in 2011. Rising costs contributed to the decline.

The company booked a 39 percent surge in its sales, general and administrative expenses to $113.91 million as well as around 427 percent rise in other operating expenses to $12.19 million, its financial report showed.

The company also saw around 79 percent increase in financial charges to $42.72 million.

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