Financial closure for Sarulla geothermal plant project expected end of March
Wednesday, January 22 2014 - 05:04 AM WIB
PT Medco Power Indonesia expects financial closure for the Sarulla geothermal power plant project in North Sumatra to be made at the end of March of this year, paving the way for the construction of the long-delayed mega project.
This was said by Medco Power Indonesia President Director, Fazil E. Alfitri to Petromindo.com Wednesday.
Medco Power Indonesia is part of a consortium, which also includes Japanese firms Itochu and Kyushu Electric and US-based Ormat Technologies, assigned to develop the 3x110 MW plant, touted to be the largest geothermal plant in the country. Medco Power, which is 51 percent owned by equity firm Saratoga Capital and 49 percent owned by IDX-listed energy firm PT Medco Energi Internasional, holds a 37.25 percent interest in the consortium.
Development of the Sarulla plant will require investment of about US$1.5 billion. About $1 billion of the costs will be financed by loans from the Japan Bank for International Cooperation (JBIC) and the Asia Development Bank (ADB), Fazil said.
He added that Medco Power is also in talks with multilateral lending institutions to help finance its equity participation in the project.
Development of the Sarulla geothermal power plant has been delayed for more than 20 years due to various obstacles. The project started to move forward after the government approved in April of last year the second amendment of the so-called power purchase agreement, under which state utility PLN will purchase the power to be produced by the plant at an average price of 6.79 US cents per kWh. At the same time, the Ministry of Finance also issued the so-named Business Feasibility Guarantee Letter to PLN and PT Pertamina Geothermal Energy, which owns the geothermal concessions, in North Tapanuli and South Tapanuli regencies.
As reported by this portal last year, the first stage of the power plant was expected to be completed in 2016, the second in 2017, and the third in 2018.
Editing by Reiner Simanjuntak