T

he first unit of a coal-fired power plant (PLTU) with a production capacity of 660 megawatts (MW) has been officially launched in Cirebon, West Java, which is hoped to boost the electricity supply in Bali and Java.

Energy and Mineral Resources Minister Jero Wacik launched the plant, the Cirebon Electric Power (CEP) PLTU, on Thursday at its site, which is located on a 100-hectares of land in coastal area near Kanci Kulon village, Astanajapura district in Cirebon.

Earlier this year, state utility firm PT Perusahaan Listrik Negara (PLN) announced the electricity supply for Java and Bali was around 22,900 MW, while demand in the region was 35,000 MW or larger by 35 percent.

The new 660 MW-plant, among Indonesia’s first to use supercritical-boiler technology that consumes coal more efficiently and produces less carbon dioxide, is expected to supply 5,500 gigawatt-hour of electricity to Bali and Java per year or around 4 percent of the electricity supply in the region.

Electricity from the Cirebon plant will be distributed through the Java-Bali interconnection.

“We hope that the Cirebon plant can also increase investor confidence and thus provide a boost to the economy since the electricity supply will be increased thanks to the plant,” Jero said in his opening speech of the plant’s inauguration ceremony.

CEP, which is one of independent power producers (IPPs) in Indonesia, is a joint venture between four companies, with Japan-based Marubeni Corporation owning the biggest stake of 32.5 percent, followed by Korea Midland Power Co, which owns a 27.5 percent stake in the firm.

The other shareholders include South Korean company Samtan Co Ltd and Indonesia’s publicly listed PT Indika Energy, each own 20 percent.

In August 2007, CEP signed a power purchase agreement (PPA) with PLN, which included a contract period of 30 years.

The Cirebon plant project has a total investment of US$850 million for its construction, which began in 2008. With a total of 1,500 workers involved during the construction process, the plant was expected to operate commercially October of last year.

However, due to some technical problems, including early protests from the community in relation to its land acquisition status, the plant could only start its operations in July, this year.

“We have several issues, but I do not see any major problems. Eventually, we can resolve all of them and since the PPA stipulates for us to start production in March 2013, I do not think the project completion is delayed after all,” CEP president director Takeo Nakata told reporters on the sidelines of the event.

The Cirebon power plant needs a supply of around 2.85 million tons of coal annually, which will be supplied by Kideco, a subsidiary of Indika Energy, and publicly listed coal producer PT Adaro Indonesia.

PLN president director Nur Pamudji said the state utility firm would buy the electricity produced by the new plant with a rate of 4.43 cents per kilowatt-hour (kWh) with an assumption the coal prices was at $30 per ton.

However, he added, that PLN would buy the Cirebon plant-produced electricity at 5.2 cents per kWh given the present coal prices.

Weekly index of coal prices is around $80 per ton, according to McCloskey Newcastle Index.

Separately, Indika Energy vice president director Wishnu Wardhana said the firm was mulling a plan to build a second unit for the Cirebon plant with a capacity of 1,000 MW, with a planned investment of around $1.2 billion to $1.3 billion.

The executive said that currently the joint venture was still in talks with the officials from the energy utilization directorate at the Energy and Mineral Resources Ministry as well as PLN over the planned second unit.

“We are hoping that, should things go on as planned, the second unit can start its operations in 2016,” he said.