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AKARTA: PT Penjamin Infrastruktur Indonesia (PII), the government’s infrastructure guarantee fund, has agreed to provide financial guarantees to investors in the PLTU Jawa Tengah (Central Java) coal-fired power plant to be built in Central Java.

The company said in a statement on Monday that under the agreement, signed last week, PII would cover the financial risks for the Rp 30 trillion (US$3.3 billion) power plant project if state electricity company PLN, the buyer of power produced by the plant, failed to meet its financial obligations.

The plant, expected to have a 2x1,000 megawatt capacity, will be built by PT Bhimasena Power Indonesia, a consortium comprised of Japanese companies J-Power, and Itochu, and Indonesian coal miner Adaro, which won the project’s tender earlier this year.

The consortium will build the plant under a build, operate and transfer (BOT) contract. Power produced will be supplied to PLN’s power distribution networks. With the signing of the agreement, PT Bhimasena is expected to soon begin construction. The project is scheduled for commercial operation by the end of 2016.