Chinese power firm, PTBA set up joint venture
Saturday, September 8 2012 - 01:49 AM WIB
State-owned coal producer PT Bukit Asam (PTBA) will team up with Chinese electricity company China Huadian Hongkong Company Ltd. to build and operate a coal-fired power plant in South Sumatra.
?The joint venture will be engaged in the production of electricity,? PTBA said in an announcement submitted to the Indonesia Stock Exchange (IDX ) in Jakarta on Friday.
Under the agreement, PTBA will hold a 45 percent stake in the joint venture called PT Huadian Bukit Asam Power, while China Huadian will own the other 55 percent.
Bukit Asam and the Chinese company won a tender launched by the state electricity company PT PLN last year to build and operate the PLTU Sumsel 8 coal-fired power plant in South Sumatra.
The power plant is designed to produce 2x620 megawatts (MW) and will require a total investment of US$1.59 billion. About 25 percent or $397 million of the total investment will be funded by equities and the other 75 percent by bank loans.
Based on its ownership percentage, PTBA will need to deliver $178.98 million in investment for the project. The company said that it would deliver $2.25 million initially and would disburse the remaining funds gradually, which would be financed by its internal cash.
PTBA held Rp 4.26 trillion ($443 million) in cash and cash equivalent at the end of June this year, according to figures from its financial report.
?We are expecting that the China Development Bank will give loans to support the remaining 75 percent of total funds needed,? PTBA President Director Milawarma said.
PTBA said that it would supply the joint venture with 5.4 million tons of coal per year for the power plant. The coal supply agreement will be in place for 25 years.
Electricity produced from the power plant will he sold to PLN under a 25 year contract, and will be distributed to areas in Sumatra and Java. ?We hope to sign a power purchase agreement (PPA) with PLN this month and start the construction of the power plant next year,? Milawarma said.
PTBA has several other power plant development projects, including the 2x8-MW coal-fired power plant in Tarahan, Lampung. The power plant is expected to begin operations by the end of 2013. The company is also developing Banjarsari power plant, which will have a capacity of 2x110 MW and is expected to start operations in 2014.
Editing by Benget Besalicto Tnb.