China Shenhua named preferred bidder for PLTU Sumsel 1

By Robert Sihotang

Hong Kong-listed China Shenhua Energy Company Limited announced recently that it has received notification from PT Perusahaan Listrik Negara (PLN) that the consortium led by the company ranked first in the shortlist of preferred bidders for the development of PLTU Sumsel 1 coal-fired steam power plant IPP project with a capacity of 2?350 MW (2?300 MW for net on-grid capacity) in South Sumatra Province.

In accordance with the notice of PLN, the consortium is currently negotiating with PLN to agree on the intention to develop the Project and the terms of a power purchase agreement with a term of 30 years.

The project is located at a site approximately 93 km to the southwest of Palembang, the capital of South Sumatra. The successful bidder will be responsible for the investment on the Project with the scheme of build, own and operate, as well as the investment and construction of the power transmission line between the power plant and the access point of the power grid and the relevant equipment and facilities. The construction period will be approximately 45 months, and the generating units to be constructed are expected to come into production in 2020.

The company proposes to establish a joint venture project company with PT Lion Power Energy (LPE), a member of the consortium and an Indonesian coal company, for investment on the project with the scheme of build, own and operate. The company and LPE will hold 75 percent and 25 percent equity interest in the project company respectively, and LPE will supply the coal for the Project.

The total dynamic investment of the project is approximately RMB 4.88 billion (US$764 million), approximately 30 percent of which will be capital funds to be contributed by the shareholders based on proportion of shareholding, and the remaining funds required will be provided by way of project financing.

Winning the tender for the project will further expand the company?s scale of installed capacity for power generation in Indonesia, and become an important step for the company to enthusiastically respond to China?s ?One Belt, One Road? initiative by steadily pushing forward its overseas development strategy, which is also in line with the clean energy development strategy of the company.

The company has a 70 percent-owned controlling subsidiary PT GH EMM Indonesia in Indonesia, operating 2?150 MW coal-fired generating units with 3,072 utilization hours and power output dispatch of 820 million kWh in the first half of 2015.

The project is currently at an initial stage, the negotiation with PLN on project development and the terms of a power purchase agreement is still ongoing, and there are still some uncertainties.

Editing by Johannes Simbolon