PT Supreme Energy Rantau Dedap (SERD) — a joint venture between Engie, Indonesia’s PT Supreme Energy and Japanese firms Marubeni and Tohoku Electric Power — has reached the financial closure for the first development phase of its Rantau Dedap geothermal power plant in South Sumatra.

On Friday, SERD signed a financing agreement worth US$540 million with the Japan Bank for International Cooperation (JBIC), the Asian Development Bank (ADB) and several commercial lenders, including the Bank of Tokyo-Mitsubishi UFJ and the Sumitomo Mitsui Banking Corporation that are covered by Nippon Export and Investment Insurance (NEXI).

“[This project] will help Indonesia provide its population with efficient low-carbon power,” Engie group CEO Isabelle Kocher said on Friday.

The Rantau Dedap I geothermal plant, expected to reduce carbon emissions by 486,000 tons per year, will start the construction process in April and will commence operations by 2020 with a production capacity of 98.4 megawatts (MW) of electricity.

Engie has also teamed up with Supreme Energy and Japan’s Sumitomo Corporation to establish a joint venture called PT Supreme Energy Muara Laboh (SEML) to develop the Muara Laboh geothermal power project with a capacity of 80 MW in West Sumatra.

SEML secured finance worth $440 million in January last year from a consortium of development finance institutions (DFI), which includes JBIC and ADB, and is currently in the construction process.

“The [Muara Laboh] project’s COD [commercial operation date] is in the fourth quarter of next year. It is on schedule,” said Johan de Saeger, Engie’s chief representative in Jakarta.

In mid-2017, Engie also signed a joint venture agreement with energy company Electric Vine Industries (EVI) to develop and operate solar photovoltaic smart microgrids in Papua with a total investment value of
$240 million.

The microgrids are expected to provide a 24/7 electricity supply to around 2.5 million people in 3,000 villages across Papua over a period of 20 years, while consumers will be able to pay by mobile phone.

However, De Saeger said Engie was still in the discussions with the Energy and Mineral Resources Ministry and Indonesia’s state electricity firm PLN regarding its project in Papua.

He added that the ministry had asked Engie to focus on electrifying 120 villages in Papua’s Yapen and Sentani areas first over a one-year period.

“Later, we would like to roll out on a larger scale, but we’re not being too ambitious to tackle all 3,000 villages. Of course, there is still a role to play for PLN as well,” De Saeger said.

“It’s a gradual approach based on approvals and agreements we make with the minister [Ignasius Jonan] and the PLN.”

In February, Jonan said he preferred to see Engie and EVI gradually move on with their microgrid project in Papua, starting with dozens of villages in the first years of operation, before expanding further.

“If half of Papua are suddenly electrified by a [foreign] company, it will become a political issue,”
he added.

Along with giant sugar producer Sugar Group Companies, Engie will also develop photovoltaic and biomass power plants worth $1 billion with a total capacity of 500 MW in Sumatra and Eastern Indonesia by 2022. In the first phase, the two have started developing 100 MW worth of solar power facilities in Lampung.

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