INDONESIA’S second largest listed coal miner PT Adaro Energy is set to conclude deals for two power plant projects worth around US$4.55 billion in total. The first 2x100MW project will be in South Kalimantan and the second 2x1000MW project will be in Central Java.

Adaro and its South Korean partner Korea East-West Power Co (EWP) have secured debt financing of $540 million for the coal-fired South Kalimantan project. The partners have formed a 65:35 joint venture called Tanjung Power Indonesia to build the 200MW plant at Tabalong.

Adaro has secured $540 million in financing from five banks. DBS Bank, Mitsubishi UFJ Financial, HSBC, Mizuho Bank and Sumitomo Mitsui Banking formed a syndicate to provide $400 million guaranteed by Korean Trade Insurance Corporation. Korean Development Bank provided the remaining amount of $140 million.

The plant is expected to be commissioned in four years and State utility firm PLN has agreed to purchase electricity for 25 years.

Adaro Energy legal director Syah Indra Aman said that the company would start construction for the project soon and it would take around 33 months to complete.

Syah also says that Adaro is on track to reach financial closure for its mega power plant project, the 2x1000MW Bhimasena Power Indonesia (BPI) in Central Java, which will require $4 billion in investment. BPI is a consortium comprising Adaro, J-Power Electric Power Development Co and Itochu Corp, which won the tender for the project in 2011.

Syah said land clearance for BPI received a boost after President Joko Widodo directly involved himself in the project by leading an opening ceremony and giving a one-month deadline to settle the land dispute.

The first stage of commercial operations was initially scheduled for 2016. However, the initial target became unfeasible in mid-2014 after BPI declared force majeure regarding the project as it was unable to acquire the remaining plot of land necessary for completion of the project.

In September Adaro announced that it was likely to reduce production at its mine site in 2016 following the ongoing decline in coal prices.

President director Garibaldi Thohir said that his company was looking at output in the range of 52 million to 54 million tonnes, up to 7% lower than the 2015 target of between 54 million and 56 million tonnes. He said the company would reduce the amount of coal offered on the spot market, with more focus on long-term contracts.

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