Adaro Energy seeking permit to develop 600 MW mine mouth power plant

JAKARTA ( – PT Adaro Energy Tbk [ADRO.JK], a diversified energy company, is expecting to get permit soon for the development of its 2×300 (600 MW) of mine mouth power plant in East Kalimantan, which will be developed in collaboration with China’s giant coal company China Shenshua Energy Company.

President Director of Adaro Energy Garibaldi ‘Boy’ Thohir, said on late Tuesday when holding a breakfasting with journalists that the company is still in preparatory stages. He said he is confident that his company will get necessary permits before moving ahead to develop the power plant.

Adaro Energy is now embarking on major power plant projects to offset gloomy coal business. The company is trying to grab power plant projects that are being launched or offered by the government. The Joko Widodo government has set ambitious plan to develop up to 35,000 MW of power plants within next five years to meet growing electricity needs of the country.

The power plants will be a combination of coal-fired, mine-mouth, gas fired, hydro-power and geothermal power plants.

On Nov. 21, 2014, PT Adaro Power, a subsidiary of PT Adaro Energy Tbk signed a memorandum of understanding (MOU) with Shenhua Overseas Development and Investment Co., Ltd in Jakarta regarding the coal and power joint project development.

Under the MoU, the two companies agreed to develop a joint project on coal and power plants in East Kalimantan. The two parties intend to establish a joint venture in Indonesia to develop mine mouth coal fired power plants (MM-CFPP), which will likely be owned 51 percent by Shenhua Overseas and 49 percent by AP.

In the first stage, Shenhua Overseas and AP agree to mine sufficient coal for, and to develop, a 2×300 megawatts (MW) MM-CFPP, and power transmission facilities. The long term power capacity is expected to be expanded in line with growth of power demand. The electricity shall be provided by integrated transmission to the Kaltim-Kalsel-Kalteng grid.

This cooperation between Shenhua Overseas and the Company to develop MM-CFPP in Indonesia is a manifestation of the strategic intention of the Indonesian governemnt to build 35 gigawatts (GW) of power plants in the next five years, most of which will be coal-fired power plants.  The MM-CFPP will use low heat value coal, which is in line with the government’s policy of obtaining value from low heat value coal.

“Adaro Energy will contribute to the generation of high quality and affordable electricity for Kalimantan. Together with Shenhua we will create maximum value from Indonesian coal, including boosting the economic development in Kalimantan and so contribute to national development.  With this MoU, we remain on track to further develop Adaro Energy’s power division,” Adaro Energy’s President Director, Garibaldi Thohir, said during the signing of the MoU. (*)

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