Financial closure for Tanjung Jati B expansion likely delayed

By Thomas Sembiring

IDX-listed heavy equipment and energy company PT United Tractors Tbk (UT) said that financial closure for the Tanjung Jati B coal-fired power plant unit 5 and 6 expansion project in Central Java is likely to be delayed from the initial schedule of July.

UT Corporate Secretary Sara K. Lubis said Monday that the necessary documents and other requirements are still being prepared. She hoped the financial closure would be made this year, but did not specify when. ?(Financial closure will be) This year. Initially, we expected in July, but can?t yet be ascertained,? she told petromindo.com.

She said that once the financial closure has been made, construction of the Tanjung Jati B unit 5 and 6, each with a capacity of 1,000 MW will be started.

UT is a member of a consortium that includes Sumitomo Corporation and Kansai Electric Power Co assigned to develop the Tanjung Jati B power plant expansion project. The consortium in December of last year signed the power purchase agreement (PPA) with state-owned electricity firm PLN for the expansion project. UT holds a 25 percent interest in the project, Sumitomo 50 percent, and Kansai 25 percent.

Construction process is expected to be completed in four years, in the hope that the power plant will start operation in 2020. About 30 percent of the new plant?s coal requirement of 7.5 million tons per year will be supplied by UT group.

The Tanjung Jati B power plant currently has a combined installed capacity of 2,640 MW.

UT Director Iwan Hadiantoro said previously that about 80 percent of funding for the estimated US$4 billion project will come from bank loans, with the remainder from equity. He added that the Japan Bank for International Cooperation (JBIC) is expected to take about half of the loan requirement, while the remainder to come from six other banks.

Editing by Reiner Simanjuntak