Power Plant Investor 'Gives Up', Declares Force Majeure  

TEMPO.CO, Jakarta – PT Bhimasena Power Indonesia (BPI), investor of the Batang steam power plant in Central Java, ceased from continuing the project's development. The company yesterday declared force majeure due, citing land acquisition problems as the major cause in the project's progress delay.

"Finishing the project could only be done with support from the government," the company stated through a press release.

The Batang power plant project has been delayed due to a series of land acquisition problems. The project funder, Japan Bank for International Cooperation (JBIC), had said that it wanted the project to be completed by the time of financial close on October 6, 2013. Yet the government had extended the financial close for another year to October 6, 2014.

BPI has purchased 85 percent of the land required to build the 2x1,000-megawatt power plant on. All project licenses, including environmental impact assessment, have been issued.

BPI is a consortium of J-Power, Itochu, and Adaro Indonesia. The consortium won the bid for the US$3.2-billion project on June 17, 2011, obtaining a concession period of 25 years as well as receiving a loan from Sumitomo Mitsui Banking Corporation and the JBIC.

PLN director of business and risk management Murtaqi Shamsuddin confirmed that the force majeure is caused by land acquisition problems. "In its statement, BPI expects the government and PLN to help with the land acquisition problems," he said.

Murtaqi said PLN is ready to take the job if the government appoints the company to enter the consortium. "But, if PLN steps in, there should be no risk allocation from BPI to PLN," he said.

In addition, Murtaqi said, PLN requires no contract change, including the power purchase agreement (PPA) price that was agreed at $5.79 cents per kWh in 2011.

AYU PRIMA SANDI