J-Power, Itochu Said to Delay $4 Billion Indonesian Plant
Electric Power Development Co. (9513), PT Adaro Energy (ADRO) and Itochu Corp. (8001) will delay the start of a $4 billion coal-fired plant in Indonesia due to an extended environmental assessment and protests by local residents, said three people with direct knowledge of the project.
The three companies expect financing for the project will be put back at least one year to October 2013, delaying the start up of the plant by 12 months to the end of 2017, two of the people said, declining to be identified because the information isn’t public.
On Oct. 6 last year, the group said the 2,000-megawatt coal-fired plant, one of Asia’s biggest, would start generating electricity in Central Java in late 2016. The delay is a set back for Indonesia’s government, which laid out plans to boost power capacity to meet rising demand in Southeast Asia’s biggest economy.
The companies are seeking about $3 billion, or 75 percent of the project costs, from banks including Sumitomo Mitsui Banking Corp. and the state-run Japan Bank for International Cooperation, said the people.
The financing has been held up because of an environment assessment and negotiations with local residents to acquire land, Seigo Mizunuma, an executive director of Electric Power Development or J-Power, said in a speech at a seminar on Oct. 9. He didn’t give details.
J-Power shares pared earlier gains of as much as 3 percent to close mostly unchanged at 2,095 yen on the Tokyo Stock Exchange while The TOPIX Electric Power & Gas Index rose 2.1 percent. Itochu fell 0.8 percent. The benchmark Nikkei 225 Stock Average fell 0.6 percent.
Junichiro Hoshino, a Tokyo-based J-Power spokesman, confirmed the project is behind schedule when contacted Oct. 10 by phone. He declined to give details and said the company is in talks with project stakeholders.
Itochu is aware of the delay and in discussions with related parties, said a company official who declined to be identified, citing internal policy.
J-Power, Japan’s biggest power wholesaler, and Indonesian coal mining company Adaro each own 34 percent of the project while Japanese trading company Itochu has 32 percent.
On Sept. 29, a Japanese employee of Sumitomo Corp. (8053) and an Indonesian driver were held for about five hours by locals on Java island who oppose the plant, Kyodo News reported, citing the police and people affiliated with the project. They were rescued by the police unharmed, Kyodo said.
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