Medco to seek investment partner for 110 MW Ijen project
Mount Batok, East Java, Indonesia (source: flickr/ taveshala, creative commons)
Alexander Richter
4 Nis 2014
With surging power demand and the need to add capacity of around 4,000 MW annually, Medco Power Indonesia is planning huge investments, among them into the 110 MW Ijen geothermal project in East Java.
Besides the large 330 MW Sarulla project, which recently closed financing, power producer PT Medco Power Indonesia, controlled by Jakarta-listed PT Medco Energi Internasional and PT Saratoga Power, announces a total investment of up to $1.3 billion into nine massive expansion projects, so the Jakarta Post.
The projects include two thermal plants and five mini-hydro plants, the 3×110 MW Sarulla project and a 110 MW geothermal power plant in Ijen, East Java.
Medco Power president director Fazil Alfitri said this week that his company needed to spend around $400 million on the Ijen plant.
Medco Power will partner with Itochu Corp., Kyushu Electric Power Co. and American company Ormat International Inc. in the Sarulla Operations Ltd. consortium for the Sarulla project, which has an estimated $1.5 billion price tag.
Apart from the Sarulla project, which will be the biggest in Indonesia, and the Ijen project, Medco Power is working alone in the seven remaining projects.
With the huge amount of money needed for the Ijen project, Fazil said the company would mull partnerships. He said he expected the Ijen project to be completed by 2018.
“We have finished exploration works for the Ijen project and are preparing for the drilling of the first well next year. We have obtained all permits, including forestry[-related] permits,” he said.
For the Sarulla project, the Sarulla consortium recently secured $1.17 billion funding from Japan Bank for International Cooperation (JBIC), Asian Development Bank (ADB) and a consortium of commercial banks comprising Bank of Tokyo-Mitsubishi UFJ Ltd., ING Bank N.V., Mizuho Bank, Ltd., National Australia Bank, Société Générale and Sumitomo Mitsui Banking Corp. as Mandated Lead Arrangers.
Being the biggest shareholder in the Sarulla consortium with 37.25 percent, Medco Power will contribute around $558 million to the project.
“The EPC [engineering, procurement and construction] phase will start in May or June. Our target is to see the first phase of development — the first 110 MW unit — start operation in June 2016,” Fazil said.
The Sarulla geothermal power plant is expected to help the government lessen the power crisis in the northern part of Sumatra.
State-owned electricity company PT PLN senior corporate communications manager Bambang Dwiyanto said earlier that demand for electricity in northern Sumatra peaked at 1,600 MW, which exceeded the company’s ability of 1,400 MW. As of the end of 2013, the country has electricity generation capacity of 47,128 MW.
With electricity demand growing due to economic growth, capacity must be upped by 6 gigawatts (GW) every year during the 2013-2022 period.
The government is calling for more utilization of non-fossil fuel to generate electricity to meet growing demand. Currently, power is mostly generated from fossil fuel despite the abundant renewable resources of solar and geothermal energy. Around 40 percent of global geothermal potential capacity lies in Indonesia but development remains low.”
Source: The Jakarta Post
