Revision of PPA for Sumsel 8 project misses September target

IDX-listed coal miner PT Bukit Asam Tbk (PTBA) and state-owned electricity firm PT PLN are still in talks over the revision of the power purchase agreement (PPA) for the 2x620 MW South Sumatra 8 mine mouth power plant project (Sumsel 8), thus failing to meet the initial deadline of end of September, Bisnis Indonesia reported on Tuesday.

?The PPA (revision) is still in the process of discussion. It can?t yet be ascertained (when will be completed),? PTBA Corporate Secretary Adib Ubaidillah told the paper.

PTBA has been assigned to develop the Sumsel 8 mine mouth power plant project in South Sumatra Province.

As has been previously reported, as part of the revision of the PPA, the development of the US$1.6 billion Sumsel 8 project would no longer depend on certainty over the planned development of the high voltage direct current transmission (or HVDC) that would link South Sumatra and Java.

Under the original PPA, PLN is required to issue letter of intent for the construction of the HVDC project to allow PTBA to start construction of the Sumsel 8 power plant project. ?This requirement will be eliminated,? PLN Procurement Director Supangkat Iwan Santoso said previously. PLN is considering to cancel the HVDC project.

As such, the revision of the PPA would in turn allow PTBA to be ?flexible? in selling the electricity output from the Sumsel 8 power plant. This means that the electricity can be distributed in Sumatra, no longer entirely be allocated for Java.

PTBA is teaming up with China?s Huadian Group to develop the power plant project. The joint venture company called PT Huadian Bukit Asam Power has already completed acquisition of the required 103 hectares land for the project, which has obtained funding commitment among others from Bank of China. (*)