Adaro?s $4b coal-fired power plant project delayed

A consortium of PT Adaro Energy and two Japanese companies J-Power and Itochu Corporation will likely delay the construction of a US$4 billion coal-fired power plant which will be built in Batang, Central Java, a local media reported on Saturday.

Saigo Mizunuma, the executive director of J-Power, said on Friday that the construction of the power plant, which would have a capacity of 2 x 1,000 megawatt, would be delayed for at least 12 months due to financial problems.

The power plant, one of the largest in the country, is initially scheduled for completion in 2016. The late start of construction will delay the commercial operation of the power plant to 2017.

The consortium is negotiating with a number of banks including Sumitomo Mitsui Banking Corp to provide $3 billion or about 75 percent of the funding requirement. However, the negotiation has been hampered by the delay in the issuance of the environmental impact analysis (AMDAL) for the project.

In addition, the project has been also hampered by land acquisition problems as well as the resentment from the people from several villages near the power plant project. In September, an employee of Sumitomo Corp and his driver were detained by the local people.

Junichiro Hoshino, the spokesman of J-Power, has confirmed about the delay of the project.

The power plant will be operated by PT Bhimasena Power Indonesia, a joint venture established by the consortium. J-Power and Itochu have 34 percent stake each in the joint venture, with the remaining 32 percent is held by Adaro.(*)