ABM Investama to build $200m power plant

IDX-listed integrated energy company PT ABM Investama Tbk plans to build a 100 MW coal-fired power plant near its coal mines in Aceh as part of a diversification strategy amid the current drop in coal price, Bisnis Indonesia reported on Tuesday.

The paper quoted Corporate Secretary of the company Yovie Priadi as saying that investment requirement per MW is estimated at around $1.5-2 million, which means the company will have to allocate between $150-200 million to develop a 100 MW plant.

He said that about 30 percent of the investment requirement would be funded internally, while the remaining 70 percent is expected to come from bank loans.

Yovie said that the investment in the power plant sector is part of the company?s strategy which aims to rebalance its sources of revenue with the outlook that the coal sector is projected to account for 50-60 percent of total revenue by 2020, while the non-coal sector 40 percent. ABM also operates logistics and mining services subsidiaries.

ABM is seeking to take advantage of a new government policy (Minister of Energy and Mineral Resources Regulation No 3/2015), which allows state-owned electricity firm PT PLN to directly appoint independent power production to develop a particular project without tender process.

Yovie said that the company has yet to decide on when to start construction o the planned power plant project as ABM is still waiting for the implementing ruling of the new policy.

He expected, however, that the implementing regulation could be issued soon so that the company could start construction this year, in the hope that it could be completed in 2016 or 2017. (*)