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Indonesian-Malaysian JV teams up with Chinese firm for $675-M power projects

Publication Date : 04-04-2014

 

PT BTN Energy Prima (BEP), a joint venture between Indonesia’s PT Biidznillah Tambang Nusantara (BTN) and Malaysia’s BTN Power Sdn Berhad, has joined forces with Chinese state firm China Machinery Engineering Corporation (CMEC) to build US$675 million worth of coal-fired power plants in palm oil-rich Dumai in Riau, Sumatra.

The 3 x 150-megawatt (MW) coal-fired power plants in the so-called Pelintung Dumai Industrial Area will start construction in July. Construction is expected to be finished by April 2018.

“The power plants will provide electricity for plants in the industrial area as well as for households,” said BEP president director Harijono during a press briefing in Jakarta on Thursday.

Chinese companies have expressed interest in investing in Dumai, a major ferry port with connections to Malaysian cities, but hesitated due to electricity shortages, according to CMEC deputy general manager Yaejun Chao.

“Dumai has an industrial complex but is experiencing an electricity shortage. We hope the area will have enough electricity with the new power plants,” said Chao. “It is important for Dumai to have enough electricity supply.”

Of the total energy produced by the power plants, 245 MW will be provided for factories operating in the area while the remaining will be distributed to households in Riau.

The electricity will be sold at 900 – 1,200 rupiah (US$0.079-$0.10)per kilowatt-hour (kWh) for companies.

“For the distribution to households, we will later cooperate with [state-owned electricity firm] PT PLN and the price will be determined by them,” said BTN president commissioner Muhammad Ma’shum.

CMEC will provide financing and a technology package of engineering procurement and a contribution (EPC) contract on a mutually acceptable repayment arrangement upon project completion.

Meanwhile, coal for the power plant will be supplied by BTN from its mining sites in Kalimantan and South Sumatra.

According to the contract, BTN will provide a down payment of 15 percent of the total cost before construction starts and will pay the rest to CMEC upon completion of the plant.

BTN will supply 3.2 million tonnes of coal per year to get the power plant running.

Ma’shum of BTN said he had been advised by Investment Coordinating Board (BKPM) head Mahendra Siregar to build a power plant in Dumai to supply electricity not only for households but also for plants in the industrial area.

PT Biidzinillah Tambang Nusantara Indonesia is owned by Al-Ishlah Islamic Boarding School, based in Bondowoso, East Java, and was founded in 2006 by Ma’shum.

Last year, BTN had also cooperated with CMEC and BTN Power to build a $100-million integrated industrial complex in Situbondo, East Java. The industrial complex, built on a 2,000 hectares (ha) of land, included several refineries, a petrochemical complex as well as a 600-MW steam power plant.

The Situbondo industrial complex is still under construction, according to BEP’s Harijono.

Early next year, the three companies also plan to expand the existing industrial complex in Dumai to a smaller-scale 700 ha plot of land, complete with an oil refinery, steel plant and yarn manufacturing plant.

“We do not know yet how much the investment for the industrial complex will be or when exactly we will start construction. Currently we are focusing on the power plant,” said Harijono.

“However, several Chinese companies have expressed their willingness and readiness to establish manufacturing plants,” he added.

Dumai Mayor Khairul Anuar said the city was a strategic area for business as it was adjacent to Malaysia and Singapore.

He applauded BTN’s efforts in developing Dumai into an industrial city.

 

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