Adaro Plans $3.5 Billion Sumatra Power Plant

ID/Elizabeth Gloria Berahmana& Efi Nurfiyasari

Adaro Energy, the country’s second largest coal producer, is planning to build a coal-fired power plant in South Sumatra at a cost of $3.5 billion, a top company executive has said.

President director Garibaldi Thohir said the company will invite foreign investors to team up with Adaro to build the plant. Garibaldi said several foreign companies had expressed interest in joining with Adaro to build the power plant. The plant is expected to generate 1,200 megawatts of power.

“We are still studying it now. Typically we join hands with Japanese and Korean investors,” Garibaldi said. He did not disclose potential name of the Japanese and Korean companies.

In May last year, the consortium that brings together Adaro with Japanese trading house Itochu and Japanese electricity company Electric Power Development, won a project to build a $3.2 billion power plant in Pemalang, Central Java. The consortium is known as J-Power.

The project is part of the first phase of the government’s “fast-track” program to add 10,000 megawatts of electricity to the Perusahaan Listrik Negara power grid.

The consortium’s Pemalang coal-fired plant will have a capacity of 800 to 1,000 MW. Adaro Energy holds a 34 percent stake in the J-Power project.

Garibaldi said the company had cut its annual production forecast to between 48 million and 51 million tons of coal this year, citing difficult market conditions. The company’s original forecast for the year was 50 million to 53 million tons.

Adaro’s coal production was 12.05 million tons in the second quarter of this year, bringing first-half production to 23.01 million tons.

The result was a slight improvement from the 22.81 million tons of coal produced last year, the company said in its quarterly activities report last week.

The coal miner experienced a 5.1 percent year-on-year decrease in coal sales during the second quarter, while sales for the first half were 23.96 million tons, down from 24.02 million tons, it said last week.

Shares in Adaro rose 2.7 percent to Rp 1,540 on the Indonesia Stock Exchange on Thursday. The shares have fallen 13 percent so far this year, compared with an 8.5 percent gain in the local market benchmark gauge.

Adaro is competing with rivals Bumi Resources and Harum Energy in Indonesia’s coal industry.
Adaro already operates coal mines in South Kalimantan, a power plant in Central Java and soon potentially another plant in South Sumatra. GA Photo/M. Defrizal