PLN signs agreement with two IPPs

State owned electricity firm PT Perusahaan Listrik Negara (PLN) has signed agreements with two Independent Power Producers (IPP) which plan to develop a huge hydropower plant (PLTA) in North Sumatra and a coal-fired power plant (PLTU) in South Kalimantan respectively.

One of the agreements is a Heads of Agreement (HoA), which was signed by the state firm with PT Dharma Hydro Nusantara (DHN) which plans to develop PLTA Batang Toru in North Sumatra with a capacity of 500 MW. The HoA was signed by PLN?s Director Murtaqi Syamsuddin, PLN?s Director Bagiyo Riawan and DHN?s President Director Anton Sugiono.

The power plant will use the river of Batang Toru to generate power. It will function as peaker in the northern Sumatra power system, which covers North Sumatra and Aceh provinces.

The project does not require a government guarantee letter, which is known in the industry as Surat Jaminan Kelayakan Usaha/SJKU (Business Viability Guarantee Letter/BVGL). DHN will use its own funds plus loans to develop the project. Goldman Sachs (Asia) LLC has expressed commitment to helping finance the project.

Besides, PLN has also signed a PPA with PT Tanjung Power Indonesia (TPI), a joint venture between PT Adaro Power and Korean East West Power (EWP), for a 2x100 MW PLTU Kalsel, which the joint venture plans to develop in Tabalong regency, South Kalimantan. The PPA was signed on Wednesday by PLN?s President Director Nur Pamudji and TPI?s President Director Kee Cheng Chye at PLN?s headquarters.

Adaro Power is the subsidiary of giant coal mining company PT Adaro Energy.

The project will be developed under the Build, Own, Operate & Transfer (BOOT) scheme in which the power plant will be transferred to PLN after 25 years of operation. The project is part of the 10,000 MW Second Generation Fast Track Power Plant Development Program. The project gets the SKJU guarantee letter with financing date scheduled to happen within 12 months after the signing of the PPA.

The power plant will be supply power to the Kalselteng power system, which covers two provinces in Kalimantan, namely South Kalimantan and Central Kalimantan. The power will be supplied through the 150 kV Tanjung mother station. Commercial Operation Date (COD) is targeted to be reached 33 months after the Financing Date. TPI will use South Korean-made machines and the project is estimated to cost US$400 million.

Editing by Johannes Simbolon