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China’s big firms put reputation at risk in Batang Toru power plant
After two years of delay, China’s state-owned SDIC, through its subsidiary SDIC Power, has led a group of big companies to revive the ailing hydropower plant project in North Sumatra.
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The Batang Toru forest ecosystem in South Tapanuli, North Sumatra, is home to the rare Tapanuli orangutan species. (JP/Apriadi Gunawan)
T
he construction of a hydropower plant in Batang Toru district in South Tapanuli has caused global controversy for years as it is built in the habitat of the endangered Tapanuli orangutan. The Jakarta Post joined the Society of Indonesian Environmental Journalists (SIEJ) in December in a collaborative reporting project to visit the construction site and nearby villages to get the latest developments on the project. This is the second part of the report.
While battling public scrutiny over its construction, which has encroached on the habitat of the endangered orangutan in South Tapanuli, North Sumatra, the Chinese-backed Batang Toru hydropower plant has also experienced financial struggles, resulting in delays to the project and a change of ownership.
An audit by the Supreme Audit Agency (BPK) in 2020 revealed that Bank of China (BOC), which had initially agreed to lend US$1.68 billion to finance 75 percent of the total cost of the project, decided to pull out shortly after its announcement to review the project in 2019.
The lender’s withdrawal dealt a major blow to PT North Sumatra Hydro Energy (NSHE), the developer and designated operator of the power plant, as it was forced to find new financiers willing to take part. This stalled construction for months and resulted in the missing of the plant’s planned operation for 2022.
This left NHSE’s shareholders at the time, Chinese-owned Dharma Hydro Nusantara (DHN, owning 52.8 percent), Singapore-based Fareast Green Energy (FEGE, owning 22.2 percent) and state-owned electricity monopoly PT PLN’s subsidiary PT Pembangkitan Jawa Bali Investasi (PJBI, owning 25 percent), scrambling to search for a replacement for the BOC.
Combined, the shareholders were only expected to cover 25 percent of the project cost.
Read also: Poor planning causes PLN to pay more for Batang Toru hydropower plant
