F

uel distributor AKR Corporindo says it has earmarked up to US$1.5 billion for the construction of two power plants to supply energy needs in its industrial estate in Gresik, East Java.

AKR president director Haryanto Adikoesoemo said his company planned to start development of the mega-project next year and expected to complete it in 2018.

Each of the power plants is designed to produce 2x300 megawatt (MW) electricity to 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.

Total investment in the power plants is expected to hit $1.5 billion, according to Haryanto. Some of the materials for the power plants will potentially be imported from Germany.

'€œWe are currently in the middle of discussions with both local and foreign firms with experience in building power plants to support our plan,'€ he told reporters.

As previously reported, AKR has planned to build a power plant that will be operated by a Thailand-based company, in which AKR has majority ownership.

The power plants will be needed to supply tenants in the industrial estate, which is currently in first phase of completion.

The first phase of the industrial estate covers 800 hectares. Its construction started in the middle of last year and was slated to conclude in the first quarter of next year.

The project, which is the first of its kind in the country, would have a deep sea port built on another 371 ha of land as well as an industrial estate with railway and toll road connections. The construction of the whole estate is estimated to finish in 2023 and it will have a total size of 1,760 ha.

AKR has teamed up with state-owned port operator PT Pelabuhan Indonesia III (Pelindo III) for the construction of the integrated industrial estate, having formed two joint ventures to carry out the project.

For the port, AKR, through its subsidiary, PT Usaha Era Pratama Nusantara (UEPN), formed PT Berkah Manyar Sejahtera, in which UEPN and Pelindo hold 40 percent and 60 percent stakes, respectively.

Meanwhile, for the industrial estate, UEPN and Pelindo setup PT Berkah Kawasan Manyar Sejahtera. In the second joint venture, UEPN holds 60 percent ownership, while Pelindo controls the remaining 40 percent.

AKR corporate secretary Suresh Vembu said that total investment for the first phase of JIIPE was estimated to reach between Rp 3.5 trillion (US$287.43 million) and Rp 3.8 trillion, with both AKR and Pelindo having disbursed Rp 2.3 trillion in total.

Suresh said that the company was currently sourcing for bank loans up to $1.3 billion to cover the remainder of the investment.

He further said up until now, the joint venture has secured about 1,000 ha of land for the project and had marketed 20 hectares of the land with prices ranging from $150 million to $180 million per square meter. The sales from the estate will be consolidated in the company'€™s financial sheet starting next year.

Suresh said the company aimed at reaping a 6 to 8 percent increase in revenue from Rp 22.34 trillion last year.

It aims to have its net profit to hit Rp 819.74 billion this year, up from Rp 648 billion last year.

AKR reported a 5.1 percent year-on-year increase to Rp 16.99 trillion in sales and revenue in the January-September period, while its net profit rose by about 10.2 percent to Rp 578.65 billion.