Jakarta. State-controlled coal miner Tambang Batubara Bukit Asam will allocate up to $2.1 billion through 2017 to build power plants as it looks to diversify its revenue stream beyond coal exports.
The company plans to spend $600 this year, another $700 million next year, and $800 million the following year, said Achmad Sudarto, the finance director at Bukit Asam.
“Some of the funds will be come from our internal cash, while the remainder will come from bank loans or bond issues,” Achmad said on Wednesday.
Bukit Asam will start construction of a 1,240-megawatt coal-fired power plant in Tanjung Enim, South Sumatra, by the end of this year. The $1.59 billion plant, dubbed Sumsel 8, will be built at the company’s mine mouth, which should cut transport costs and make the plant more efficient.
The Export-Import Bank of China is providing a loan for three-quarters of the plant cost, while Bukit Asam will join with Chinese power company China Huadian Hongkong to pay for the remainder of the project.
Bukit Asam is also bidding to build two planned coal-fired plants in South Sumatra: the 1,200 MW Sumsel 9 and the 600 MW Sumsel 10, both commissioned by state utility PLN. The company is competing with Adaro Energy, Baramulti Suksessarana, Hanson International, Adi Coal, International Power GDF Suez (IP GDF Suez), and Mitsui of Japan.
The winner of the tender will be announced by the end of this month, Achmad said. If Bukit Asam wins the bid, it plans to take a 45 percent stake in the projects, worth a combined $2.16 billion, and look for an overseas partner for the remainder.
Bukit Asam currently operates the 200 MW Banjarsari power plant in South Sumatra, which consumes up to 1.5 million metric tons of coal a year.
The Sumsel 8 project will need 5.5 million tons, while Sumsel 9 and Sumsel 10 will take a combined 8 million tons, Achmad said. “If this projects goes through, we will secure up to 15 million tons a year for domestic supply,” he said.
Bukit Asam’s power business is expected to account for 40 percent of the company’s income by 2019.
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