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Jakarta Post

Adaro Power sets far-reaching target of 20,000 MW power plants

  • Grace D. Amianti

    The Jakarta Post

Jakarta   /   Wed, November 19, 2014   /  11:42 am

Electricity firm PT Adaro Power, part of publicly listed coal miner PT Adaro Energy, aims to participate more in power plant tenders arranged by state-owned electricity company PT PLN next year to boost its expansion.

The participation would be a part of the company'€™s efforts to reach its long-term target of building more power plants with a total capacity of 20,000 megawatts (MW) from 2012 until 20 years ahead, Adaro Power CEO Mohammad Effendi said on Tuesday.

Effendi said Adaro Power would aim for at least 40 percent from around a 4,000-5,000 MW tender planned by PLN next year in conjunction with the development of the company'€™s current and future projects.

'€œPLN has said that it will arrange at least 4,000 MW and perhaps up to 5,000 MW next year. It would be great if we were able to take 40 percent of the amount,'€ he said at a press conference.

According to Effendi, PLN'€™s tender next year is part of its efforts to reach the goal of 35,000 MW mentioned by President Joko '€œJokowi'€ Widodo for the next five years until the end of his tenure.

Effendi said that PLN would need several investors to help the government reach its goal, which would add to Indonesia'€™s current capacity of 40,000 MW.

'€œChina currently has a 1.2 million megawatt capacity, which is 30 times higher than Indonesia,'€ he went on comparing. '€œPLN will open around 20,000 MW for private investors out of the total 35,000 MW,'€ he added.

In October, PLN announced that it would soon arrange a tender for the development of two power plant projects with a total capacity of 4,000 MW, which were referred to as the Java 5 and 7 power plants with a capacity of 2x1,000 MW each.

The coal-fired power plants, which will cost around US$3 billion, will be located in the western part of Java, either in Banten, Jakarta or others.

Effendi said that Adaro Power had already begun developing a power plant in Batang, Central Java under PT Bhimasena Power Indonesia and two others in South Kalimantan under PT Tanjung Power Indonesia and PT Makmur Sejahtera Wisesa.

However, the company, along with PLN, was currently finishing up acquiring land in Batang, where 29 percent of land project transactions had yet to be completed, he said.

Previously, the development of the 2x1,000 MW Batang power plant, which will be the biggest in Southeast Asia, faced opposition from local residents because of concerns over the environmental effects of the project, in addition to the difficulties in acquiring land.

The $4 billion power plant will be built by Bhimasena Power Indonesia, a consortium comprising Adaro Power, J-Power Electric Power Development Co. Ltd. and Itochu Corp. The power plant will sell electricity it produces to PLN under a 25-year contract.

'€œAs an Adaro Energy subsidiary, we want to contribute more to our parent company'€™s role in supporting the country'€™s power development,'€ Effendi said.

Also on Tuesday, Adaro Energy corporate secretary and investor relations division head Cameron Tough said the company had produced around 42 million tons of coal as of September this year, nearly reaching its year-end target of around 54 to 56 million tons.

Cameron said the recent weak coal market was caused by oversupply rather than slow demand, even though the company was convinced that it would reach its profit target of around $750-1 billion at the end of this year.

'€œIt is very difficult to predict the global price of coal next year as well as our target, but we are convinced that there will be positive growth of demand in the future due to a number of pipelines for new power plants in Indonesia and Southeast Asia,'€ he said.

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