Malaysia's Sime Darby eyes Indonesian power plant projects

Malaysian firm Sime Darby Bhd is mulling investments in a few private power plant projects in Indonesia to gain entry to a fast-growing market, divisional director for energy and utilities Mohd Shukri Baharom said as quoted by Business Times.

It is looking at one or two medium-sized coal-fire plants with a capacity of between 100 megawatts (MW) and 400MW in Sumatra and Java, and will probably work with local partners on the projects, he said in Jakarta recently.

"We are looking at a few private projects that supply to industrial area as a first step to entering the power sector in Indonesia. The power demand is high here with over 10 per cent growth each year," he said.

It is planning to start with private projects as power financing is hard to secure in Indonesia.

He said the Indonesian state utility PT Perusahaan Listrik Negara (PLN) is not bankable at the moment, unlike in Malaysia where an operator with a power purchase agreement with Tenaga Nasional Bhd can easily get financing from banks.

Financing a power project with internal funds may also not be viable because of the huge investment needed to develop a plant, at roughly US$1 million for 1MW.

"If we have a power purchase agreement with the private sector, we can go to the bank for funding," Mohd Shukri said.

This means that Sime will have to scout for businesses that need a lot of electricity for their operations.

The diversified group currently operates a 100MW plant in Port Dickson, Negri Sembilan, and owns the 400MW Laem Chabang plant in Thailand.(*)