ABM Investama to develop two coal-fired IPPs

By Tri Subhki R

IDX-listed integrated energy company PT ABM Investama Tbk (ABMM) plans to develop two coal-fired power plants, each with a capacity 2x20 MW and 2x200 MW, in a bid to realize the company?s target to increase power capacity by 300 MW ? 500 MW in three to five years to come.

ABM Investama, through its power solution provider subsidiary PT Sumberdaya Sewatama, produced 4,642 million KWH of temporary power with total installed capacity 1,113 MW in 2013. The planned new coal-fired independent power producers (IPPs) will be located in Sumatra region near ABM Investama?s coal mining concessions.

?We are considering some options whether to sign a power purchase agreement (PPA) with PT PLN (state-owned electricity firm) or provide power supply for other end users, for instance industrial park, by leasing PLN?s power transmission,? ABM?s Corporate Strategy Director Yovie Priadi said.

Yovie also said that the company is not only aiming to increase the power capacity via organic growth but also non-organic growth, particularly acquisition or merger. ABM Investama allocates 65 percent of its total US$130 million-150 million of capital expenditure this year for the IPPs development and the remainder for the completion of coal mining project in Nanggroe Aceh Darussalam Province.

ABM Investama will internally finance 30 percent of the total $600 million to 700 million of the IPP?s investment requirement while the remainder to come from bank loans, according to Yovie.

Based on PLN?s data, Indonesia?s power demand increases by 8.5 percent a year and the country needs 60 Giga Watt (GW) additional power supply in the next 10 years.

Electrification ratio in Indonesia is approximately only 80 percent.

Editing by Reiner Simanjuntak