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Hyundai Engineering clinches US$325 mln contract to build power plant in Kalimantan

JAKARTA (Rambu Energy) – Hyundai Engineering Co, a South Korean builder, on Friday (Dec. 12) won an EPC (engineering, procurement and construction) contract worth US$325 million from PT Adaro Energy Tbk, a diversified energy group, and its South Korean partner Korea East-West Power Co, to build a coal-fired thermal power plant in Tanjung region of Kalimantan island.

Yonhap news agency reported that the company, part of Hyundai Motor Group, said the deal includes building two 100 megawatt plants in the Tanjung region.

The total construction period will take 43 months, with Hyundai Engineering in control of all aspects of engineering, procurement and construction, as well as conducting trial operations once the project is completed.

The Tanjung power plant is being developed by PT Tanjung Power Indonesia, a company indirectly owned by PT Adaro Energy Tbk, a largest coal producer in Indonesia, and Korea East-West Power Co.

PT Adaro Power, a wholly owned subsidiary PT Adaro Energy owns 65 percent shares of PT Tanjung Power Indonesia (TPI) and PT EWP Indonesia, a subsidiary directly owned by Korea East-West Power Co. Ltd holds 35 percent.

The latest contract comes as the South Korean EPC company secured two other Indonesian orders this year. It won the US$91 million project to build a hydroelectric power station in Rajamandala and a combined cycle power plant in Batam.

On Oct 16, Tanjung Power signed a purchase agreement (PPA) with PT PLN to supply electricity from the coal-fired power plant with a total capacity of 2×100 megawatts (MW) in Tabalong, South Kalimantan. The agreement was signed in Jakarta by President Director of TPI Ernest Kee, TPI Director Bang Tae Min and the President Director of PLN, Nur Pamudji.

Under the agreement, Tanjung Power will supply electricity to PLN for 25 years. Adaro Energy said the project financed will use non-recourse debt.

The company will construct the project after it secures financing, expected by October next year. The power plant is scheduled to start commercial operation within 33 months, or by July 2018.

This project is included in the Fast Track Program Project phase 2 (FTP-2), with the BOOT (Build, Own, Operate & Transfer) scheme. It secured a government guarantee in the form of a Business Viability Guarantee Letter (SJKU).

The power plant will increase the supply of electricity to the electrical system of South and Central Kalimantan by 1,800 GWh per year through Substation of 150 kilovolts (kV), as well as increasing the ratio of the energy mix through the development of a new non-fuel power generation. (*)

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