Marubeni to team up with PLN for new Indonesian coal plant

Buoyed by Indonesia’s strong economic fundamentals, two major foreign companies, the Marubeni Corporation of Japan and the Doosan Group of South Korea, plan to further expand their business in Southeast Asia’s largest economy.

Marubeni Corporation president and CEO Teruo Asada and Doosan Group chairman Yongmaan Park unveiled their business expansion plans during a meeting with Industry Minister MS Hidayat in Jakarta on Wednesday.

Speaking to reporters following the meeting, Hidayat said that Marubeni intended to join state-owned electricity company PLN’s tender for the development of a 660-megawatt (MW) power plant.

“The firm has completed the 660 MW project in Cirebon [West Java] and it will participate in the bidding for a geothermal [power plant] project that will generate 1,000 MW,” he added.

Marubeni, through its subsidiary, Cirebon Electric Power (CEP), commenced operations at the first coal-fired power plant (PLTU) in Cirebon, West Java, last October. The plant operates as an independent power producer (IPP), which sells its electricity production to PLN.

The plant, built with an investment of US$850 million, produces 660 MW of electricity for Bali and Java islands.

Marubeni controls 32.5 percent of shares in CEP, while the remainder belongs to the Korea Midland Power Corporation (27.5 percent), Korea’s Samtan Corporation Ltd. (20 percent) and local publicly listed firm Indika Energy. Under the IPP mechanism, PLN will buy electricity from the power plant at 4.43 US cents per kilowatt-hour (kWh).

In November last year, Marubeni through the Supreme Energy Rantau Dedap (SERD), a company it established with local player Supreme Energy and France’s GDF Suez SA, sealed a power purchase agreement with PLN. SERD will build a geothermal power plant in Rantau Dedap, South Sumatra, which will supply 220MW. The plant is slated to come into commercial operation in 2016.

Marubeni would also look into developing water treatment plants in Jakarta’s regions with local and foreign partners, Hidayat said, adding that it would study the government’s offer to enter the machinery sector and shipping industry.

“I told them [Marubeni executives] we needed investment for machinery, especially for the textile industry, and also shipyards where demand is high,” he said. Indonesia’s textile industry is struggling with inefficiency resulting from high energy costs, partly due to the use of outdated machines.

Many of the 1,500 textile firms nationwide urgently need to replace their production equipment, and the government has intervened in recent years with a textile machinery revitalization program.

The country has also seen the number of ships jump from 5,000 to 11,000 in the past five years, but there are only 220 shipyards to meet the demand, leaving ample room for development.

The Industry Ministry’s director general for high-priority industries, Budi Darmadi, said that Korea’s Doosan Group, which showed expertise in the production of heavy equipment and marine diesel machinery, had expressed an interest in strengthening its presence in Indonesia.

Doosan, which is well-known for a wide range of heavy equipment, such as articulated dump trucks and excavators, is currently marketing its products through local distributors; it has yet to open a production facility in Indonesia.

“We are offering them the chance to meet the demand that we currently source from imports, such as heavy dump trucks,” Budi said.