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Jakarta Post

Cirebon power plant to start construction in Q2 next year

  • Raras Cahyafitri

    The Jakarta Post

Jakarta   /   Thu, October 29, 2015   /  05:30 pm

Construction of a 1,000 megawatt (MW) power plant in Cirebon, West Java, will start next year following a purchase agreement in which state electricity company PT PLN agreed to buy power from the plant for 25 years.

The new coal-fired plant will be an expansion of an existing 660 MW plant.

The project will be carried out by the consortium PT Cirebon Energi Prasarana comprising CEPR BV, a subsidiary of Marubeni Corporation, Cirebon Energy Holdings Co. Ltd., owned by Samtan Co. Ltd., Chubu Electric Power Co. International BV, Komipo Global Pte. Ltd. and PT Prasarana Energi Cirebon, a subsidiary of energy company PT Indika Energy.

According to Indika Energy, construction work will start in the second quarter of next year and will take about four years to complete.

'€œWe expect that the power plant will be finished and will be in operation in 2020,'€ Indika said in an email.

Indika, through its subsidiary PT Prasarana Energi Cirebon, holds a 25 percent stake in PT Cirebon Energi Prasarana.

A power purchase agreement with state-owned electricity firm PT Perusahaan Listrik Negara (PLN) was finalized last week.

The plant, which is part of the government'€™s ambition to generate additional electricity capacity of 35,000 MW in five years from PLN and independent power producers, is estimated to cost around US$2 billion.

'€œThe development of this project will be funded by international banks, such as Japan Bank for International Corporation, Nippon Export and Investment Insurance and the Export-Import Bank of Korea,'€ Indika said.

Indika previously said that it would withdraw from the expansion project because its financial situation had been hurt by plunging coal prices. The company originally planned to divert its portion of the consortium to its parent company.

Indika declined to comment on questions regarding its decision to continue involvement in the 1,000 MW expansion project.

Under the power purchase agreement, electricity produced from the power plant will be purchased by PLN under a 25-year contract. The electricity produced will be delivered to the 500 kilo Volt main station Mandirancan, according to PLN.

Figures from PLN show that the power plant will be able to produce 6.9 TerraWatts of electricity every hour. The production capacity is expected to help PLN satiate growing power demand in Java.

PLN expects that the consortium will be able to speed up development of the power plant because no land issues will hamper the project in light of the fact that it will be built close to an existing facility already in operation.

Land acquisition has long been a key issue in infrastructure development in the country. For example, the development of a coal-fired plant in Batang regency in Central Java has been delayed for years as local residents have refused to allow their land to be used for the project.

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