BACKGROUND AND INTRODUCTIONAcccording to the Rencana Usaha Penyediaan Tenaga Listrik / Electricity Supply Business Plan (“RUPTL”) prepared by PT. Perusahaan Listrik Negara (persero) (“PLN”), Indonesia’s state-owned electricity company and endorsed by the Ministry of Energy and Mineral Resources (“MEMR”), electricity demand in Indonesia in the period of 2015-2024 is expected to increase from 219.1 TWh in 2015 to 464.2 TWh in 2024, or growing by an average 8.7% per year. Demand in the Java-Bali region alone is expected to grow an average of 7.8% per year for the same period (165.4 TWh in 2015 to 324.4 TWh in 2024). Similar growth trends are observed in Sumatra and Eastern Indonesia as well. 2
Electricity demand increase in the region is being driven by three main factors, namely (i) economic growth, (ii) electrification programs and (iii) the transfer of captive power to the PLN grid. First, economic growth in simple terms is the process of increasing the output of goods and services. The process requires electricity as one of the inputs to support it, in addition to inputs of other goods and services. A driver of this economic growth is the increase in income of the community which encourages increased demand for goods / electrical appliances such as televisions, air conditioners, refrigerators, etc. As a result, demand for electricity will increase. The second factor is the electrification program being pursued by the Government of Indonesia. In an effort to support the Government in improving the electrification ratio, it is necessary to provide increased electrical supply for all communities in Indonesia. The third factor that drives the growth of electricity demand is shifting from captive power due to high fuel prices (the use of oil-fired power plant itself).
Given this context, the use coal-fired power plants to meet short term electricity demands with cost-effectiveness is fundamental. Indeed, a further step has been taken in terms of legislation: PLN has been requested in “Presidential Decree No. 45 of 2014 on Assignment to PLN” to accelerate the construction of power plants using coal.
In this context, following the successful construction and operation of Tanjung Jati B coal fired power plant (“TJB”) Units 1-4, this project aims at the expansion of the existing facilities to construct new two units (“TJB 5&6” or the “Project”). The Project is expected to supply additional electricity to the Java-Bali electricity grid with a capacity of 2 x 1000 MW and equipped with an ultra-supercritical (“USC”) technology to gain better efficiency and lower CO2 emissions.
|Established in||September 2015|
|Head Office||Summitmas Building I, 15th floor, Jalan Jenderal Sudirman Kav. 61-62 Jakarta 12190, Indonesia|
|Business Category||Power Plant|
|Business Description||As an IPP, PT Bhumi Jati Power construct, own and operate Tanjung Jati B Coal Fired Power Plant Unit 5&6 (Jawa-4), based on BOOT scheme, and sell the electricity to PT PLN in accordance with the Power Purchase Agreement.|
- Sumitomo Corporation and its Group Companies (Japan)
- The Kansai Electric Power Co.,Inc and its group companies (Japan)
- PT United Tractors tbk, and its group companies (Indonesia)
The Project obtained permission (in the form of an environmental license) before construction of the facility commenced on 31 March 2017. An Environmental and Social Impact Assessment Report (“ESIA”, or “ANDAL” in Indonesia) was prepared according to Indonesian legal requirements, in order to identify and assess biological, physical and socio-economic impacts, and developed mitigation measures to reduce their magnitude. International guidelines and standards from the International Finance Corporation (“IFC”) were also used as benchmark in order to ensure the application of best practice for the new project.
TJB 5&6 will be constructed adjacent to the existing units 1 to 4, in Tubanan village, Kembang sub-district, Jepara Regency, northern Central Java, as illustrated in Figure 1. After investigation of numerous alternatives, the expansion alternative was selected due to the characteristics of sea depth and sea current stability, coal availability at competitive prices, well-developed infrastructure and the relatively ease of providing a seawater intake structure.
For this expansion project, the Project sponsors, Sumitomo Corporation, The Kansai Electric Power Co., Inc. and PT United Tractors, Tbk, have established the Project Company, PT Bhumi Jati Power, which will own the plant. A Power Purchase Agreement has been executed between PT Bhumi Jati Power and PLN, Indonesia’s state-owned electricity company.