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Construction of Muara Laboh Geothermal Power Plant in Indonesia Commences

Construction of Muara Laboh Geothermal Power Plant in Indonesia Commences


Sumitomo Corporation (head office: Chuo-ku, Tokyo; President & CEO: Kuniharu Nakamura), has been jointly engaged with PT. Supreme Energy (head office: Jakarta; CEO: Mr. Supramu Santoso), a private Indonesian geothermal power generation project developer, and Engie (head office: Paris; CEO: Ms. Isabelle Kocher), a leading global energy company, for the development of the Muara Laboh geothermal power project (hereinafter, “the Project”) located in the West Sumatra Province of Indonesia. Having met the required conditions precedent for project financing, the Project commenced construction on March 24, 2017.

No Japanese company has ever been involved in the development of an Indonesian geothermal power project from as early a stage as Sumitomo Corporation has in the Project. Under a long-term power purchase agreement for 30 years with the project company PT. Supreme Energy Muara Laboh and PT. PLN (Persero), the Indonesian state-owned electricity utility, the Project will be able to offer a generation capacity of 80 megawatts. Total costs will amount to approximately 70 billion yen, and commercial operation is scheduled to commence in October 2019.

The engineering, procurement and construction (EPC) contract was awarded to the consortium of Sumitomo Corporation and PT. Rekayasa Industri, with the main equipment such as geothermal steam turbine and generator to be supplied by Fuji Electric Co., Ltd. In addition to capital investments, the Project will be co-financed through project financing by Japan Bank for International Cooperation (JBIC), Asian Development Bank (ADB), Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi UFJ, Ltd., and the Leading Asia’s Private Infrastructure Fund (LEAP: A trust fund jointly established by ADB and the Japan International Cooperation Agency (JICA)). Financing by Japanese commercial banks will be covered by overseas untied loan insurance offered by the Nippon Export and Investment Insurance (NEXI). The Project is thus being undertaken by the consolidated efforts of Japanese companies.

Indonesia has the second largest amount of potential geothermal power resources in the world, with a total potential of around 29,000 megawatts, of which only about 5% of this potential being utilized. The Indonesian government is promoting the development of geothermal power generation, with a target set to achieve 7,000 megawatts in generation capacity by 2025.

Sumitomo Corporation and its wholly-owned subsidiary, Sumisho Machinery Trade Corporation (SMT), have been involved in about 50% (769 megawatts) of all completed geothermal power projects in Indonesia (1,616 megawatts) in terms of generation capacity.

Sumitomo Corporation will continue to accumulate promising geothermal power generation assets in an effort to contribute to the Indonesian government’s strategy of accelerating geothermal power generation and to make efficient use of renewable energy on a global scale.

Through its involvement in the global power infrastructure business, Sumitomo Corporation is seeking to provide its stakeholders with its Triple Values, namely, “Environmental Value” through eco-friendly power generation projects, “Societal Value” through power infrastructure development and “Economic Value” for the company with contribution to the local economy. Sumitomo Corporation will continue to pursue these Triple Values via the power infrastructure business across the world.

Anand Gupta Editor - EQ Int'l Media Network


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