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Jakarta Post

Construction of Batang power plant to start end of this month

  • Raras Cahyafitri

    The Jakarta Post

Jakarta   /   Wed, April 8, 2015   /  08:47 am

The government will start the construction of a coal-fired power plant in Batang, Central Java, at the end of this month despite protests by local people who say the project will affect the fertility of their land.

The Batang power plant, the first to be built using a public-private partnership (PPP), had been put on hold because plots of land for the project were in dispute.

To settle the land issue, the government invoked the 2012 Land Acquisition Law, which enables land procurement in the name of public interest.

On Tuesday, President Joko '€œJokowi'€ Widodo claimed that land acquisition for the power plant project had been completed thanks to the law.

'€œIt'€™s completed, no more problems. By the end of the month, we will go there for the ground-breaking ceremony,'€ Jokowi said after a visit to the state electricity company PLN office on Tuesday.

The 2x1,000-megawatt (MW) Batang power plant will be the biggest in Southeast Asia. It was initially planned to be built on 226 hectares of land. PT Bhimasena Power Indonesia (BPI), a consortium comprising Jakarta listed PT Adaro Energy, J-Power Electric Power Development Co. Ltd. and Itochu Corp., won the
tender for the power plant project in 2011.

The development is estimated to cost US$4 billion. The power plant will sell the electricity it produces to PLN under a 25-year contract. The first stage of commercial operation was initially scheduled for 2016. However, this became unfeasible partly because in mid-2014 BPI declared the project a force majeure following its inability to acquire about 15 percent of the land.

The government got firm on the land issue by invoking the Land Acquisition Law, which came into effect this year.

The government then assigned PLN to acquire the needed land for the Batang power plant, which is crucial to divert a power crisis.

Meanwhile, PLN president director Sofyan Basir said his company had been working to acquire about 9.6 hectares of land based on the initial development plan. In fact, he said, the company would need to acquire only 1 to 2 hectares of land as the remaining plots would not be considered for the project.

'€œAcquisition has been completed and we have prepared Rp 1.8 billion to be deposited with the court,'€ Sofyan said.

Under the Land Acquisition Law, any land acquisition disputes are to be settled at court. Meanwhile, the developer must deposit an amount of money calculated based on the land'€™s value with the court as compensation for residents opposing the acquisition.

Although the legal process may be ongoing, the related project can proceed.

The Batang land acquisition is expected to be a model for other acquisitions, particularly for electricity projects.

As part of an attempt to maintain economic growth, the government aims to see an additional 35,000 MW in new power capacity developed by PLN and private players within the next five years, much of which will be generated by big power plants in need of large plots of land.

The massive electrification program will also need a 42,000-kilometer transmission network, which is also facing similar land acquisition problems.

In addition to the 35,000 MW program, there are also ongoing projects involving power plants producing 7,000 MW.

PLN figures show there are 383 power plant projects with prepared plots of land for development, while land for the remaining 125 projects remains unprepared.

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