Banten Suralaya power station

From Global Energy Monitor

Banten Suralaya power station is a 4,025-megawatt (MW) coal-fired power complex in Banten Province, Indonesia.

There are proposals for an expansion that would add Unit 9 (1000 MW) and Unit 10 (1000 MW),[1] also known as Jawa-9 and Jawa-10. The estimated cost of the expansion is US$3.5 billion.

Location

The map below shows the plant, in Pulomerak District, Cilegon City, Banten Province. Units 1-7 are on the southwest side of the complex and Unit 8 is on the northeastern side, with a large open-air coal storage area located between. The site of the Banten Serang power station is just to the northeast of Unit 8.

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Background on Plant

Banten Suralaya power station is a 4,025-megawatt (MW) coal-fired power complex consisting of 8 generating units located on the northwest tip of the Indonesian island of Java, close to the city of Cilegon and about 150 km west of the capital city of Jakarta, Indonesia. The complex is owned by PT PLN. In 2017 construction began on Unit 9 (1000MW) and Unit 10 (1000MW) at the same location, under a partnership in which PT PLN Persero has 51% ownership and PT Barito Pacific Tbk has 49%.[1][2]

The power complex was built in four phases:[3][4]

Phase I

  • Unit 1 - 400 MW - 1984
  • Unit 2 - 400 MW - 1985

Phase II

  • Unit 3 - 400 MW - 1988
  • Unit 4 - 400 MW - 1989

Phase III

  • Unit 5 - 600 MW - 1996
  • Unit 6 - 600 MW - 1997
  • Unit 7 - 600 MW - 1997

Phase IV

  • Unit 8 - 625 MW - 2011

PLN also has a major training facility in Merak, several kilometers to the southwest of the Suralaya plant, which uses Suralaya to train PLN workers.[5]

An explosion and fire at the 30-year-old transformer of Unit 4 in December 2013 caused widespread power failures in the area.[6][7]

Coal source

The power station receives coal through its attached Suralaya coal terminal, also owned by PLN. Coal comes from Bukit Asam Coal Mining operations in South Sumatra.[8]

Proposed Units Jawa-9 & Jawa-10: 1000 MW

According to the PT PLN 2016-2025 long range plan (page 147), PLTU Jawa-9 could be developed as an expansion of an IPP which has been in operation, or the construction of new power plants by IPP in Banten province.[9]

In October 2016 PLN announced that it would build two additional units at the plant and that construction would take three years.[10]

In September 2017 PLN President Director of Indonesia Power Sri Peni Inten Cahyani announced that these units would each produce 1,000 MW each and would be built with PLN's partner, PT Barito Pacific Tbk, with PLN having 51% ownership.[2]

In December 2017 there was a "groundbreaking ceremony" for the plant,[1] but construction did not follow.

In March 2018 the General Manager of the plant estimated that construction of Units 9 & 10 would be complete in 2022.[11] According to the PT PLN 2017-2026 plan, both Jawa-9 and Jawa-10 are delayed to 2022 and increased in size from 600 MW to 1000 MW in order to use a more "efficient and environmentally friendly" technology.[12] The plants will be developed either by PLN or as an IPP with alternative locations in Central Java or West Java.[13]

In February 2018 PLN subsidiary Indonesia Power, along with Indonesia petrochemical company PT Barito Pacific, announced they had shortlisted three to four companies for the Engineering, Procurement, and Construction (EPC) contract to develop their Java 9&10 coal-fired power stations, with the selection to be announced by mid-2018. The coal plants are described as ultra supercritical with an estimated cost of about US$3.5 billion. Domestic infrastructure financing institutions such as Sarana Multi Infrastruktur are expected to support the power plant, as well as the export credit agency of the selected EPC contractor.[14]

In September 2018 it was reported that Doosan Heavy Industries and Construction from South Korea along with Indo Raya Tenaga (IRT) would begin construction of Jawa-9 and Jawa-10 in early 2019.[15]

In May 2019 it was reported that Barito Pacific was still trying to achieve financial close for Jawa-9 and Jawa-10 and hoped to do so by the end of 2019.[16] The long-range plan for 2019-2028 lists a completion date of 2023 for Jawa-9 and 2024 for Jawa-10.[17] In September 2019 PT PLN Persero announced that construction of Jawa-9 and Jawa-10 would begin in January 2020.[18]

Opposition to plant

As construction began on the Unit 9 & 10 expansion, residents complained about already high levels of air pollution from the plant and damage to the sea and local fishing industry.[1] One resident compared the sight of the nearby plant to a scene from Lord of the Rings.[1]

In August 2019 three residents of Banten and civil society groups from the State of Ginseng, South Korea sued the project's potential funders in South Korea's Level 1 Court to stop financing for the plant on the grounds that building it would be irresponsible toward future generations. These funders are Korea Development Bank (KDB), the Korea Export-Import Bank (Kexim), and Korea Trade Insurance Corporation (K-Sure).[19]

A report published by Greenpeace in November 2019 modeling the health impacts of the project found that Jawa 9 and 10 will cause 4,700 premature deaths over its lifetime.[20]

In August 2020 WALHI called on the Governor of Banten to revoke the environmental permits for Jawa-9 and Jawa-10 on the grounds that the plants were not in compliance with Regulation No. 15/2019 concerning emissions, that public participation in the permitting process had been inadequate, and that the Environmental Impact Assessment (AMDAL) contained misinformation.[21]

Financing

In November 2018 environmental activists called on the South Korean banks funding the expansion to withdraw their support. The expansion will cost an estimated US$3.5 billion and be financed with loans from the Export-Import Bank of Korea (KEXIM), the Korea Development Bank (KDB Bank), and the Korea Trade Insurance Corporation (K-sure).[22]

In September 2019 it was reported that PLN was advancing the financing arrangements for the expansion and was hopeful of reaching financial closure by the end of 2019.[23] The financing structure is said to comprise 25 percent via internal financing and 75 percent via a syndicated loan from 15 Indonesian and foreign lenders. Singapore's DBS Bank is the financial adviser on the deal.

In March 2020 financial closure had still not been reached. It was reported that, alongside DBS, Korea Development Bank and Kexim, the Indonesian Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia are also set to be involved in the financing. Messages were mixed about the likelihood of a near-term deal. One source told IJGlobal that signing "will happen in the near term." A less optimistic source told IJGlobal that devising a financing structure is proving to be challenging and that the announcement of financial closure was not "imminent".[24]

A study published by Korea Development Institute (KDI), an autonomous policy-oriented research organisation, in June 2020 showed that financing for the expansion would result in significant losses for investors if it is signed off. According to KDI, the financial plan of South Korean utility Korea Electric Power Corporation (KEPCO), the only foreign firm backing the project that will hold a share of ownership in the plant, for the Jawa project takes an overly optimistic view of the expected amount of power sales and potential power transmission rates, and the study shows that the present value of cash flows pumped into the power project would exceed that of inbound cash flows by US$43.58 million over the station’s lifetime. Kepco itself would be set to lose US$7.08 million in equity investments, according to the study. Youn Sejong, director of the South Korean environmental law NGO Solutions for our Climate, said that while the project's potential loan investors were less at risk because their investment would be paid off first, the fact that the project itself was valued negative should still be a wake-up call for the banks supporting it. Speaking to Eco-Business, Sejong said: “Investors backing the project should pull out given the estimated unprofitability. Because the construction has not commenced, this is the best time to withdraw from the project with no sunk cost involved.”[25] In June 2020 KEPCO's directors approved the US$51 million purchase of a 15% stake in Jawa-9 and Jawa-10. Once completed the ownership of the two plants will be PT PLT 50%, PT Barito Pacific 34%, and KEPCO 15%.[26]

In July 2020, it was announced that a US$2.6 billion debt facility for Jawa 9 & 10 had been signed. Confirmed lenders include the project's financial adviser DBS, Korea Export Import Bank, Korea Development Bank, Hana Bank of South Korea, CIMB and Maybank of Malaysia, Bank of China, Bank Mandiri, Bank Negara Indonesia and Exim Bank of Indonesia. Siemens Bank had been expected to participate but dropped out of the lending consortium. The sponsors are aiming to meet all the necessary conditions within six weeks to two months of signing to reach financial close and make the first drawdown of funds.[27]

At the end of July 2020, South Korean lawmakers proposed four bills in the National Assembly that would prohibit government-backed institutions from funding coal projects. Affected firms would include Korea Eximbank, Korea Development Bank, Korea Electric Power and Korea Trade Insurance Corporation. It is unclear when voting on the bills will take place in the South Korean parliament and the new laws will not have a retroactive effect. The Jawa 9 & 10 project which has been given the go-ahead by Kepco’s board of directors is therefore likely to proceed with South Korean financing if the firm has managed to finalise all financial contracts for the project.[28]

In August 2020, IJGlobal reported that one of the project sponsors Barito Pacific had signed a US$252.7 million corporate loan with Bangkok Bank to allow the company to make an equity contribution of the same amount for the construction and development of Jawa 9 & 10. The remaining project finance debt had not reached financial close, according to IJGlobal.[29]

Project Details for Units 9 & 10 (1000MW) Expansion

  • Sponsor: PT PLN 51%; PT Barito Pacific Tbk 34%; KEPCO 15%[30]
  • Parent company: Government of Indonesia
  • Location: Pulomerak District, Cilegon City, Banten Province, Indonesia
  • Coordinates: -5.8892179, 106.0336018
  • Status: Pre-permit development
  • Gross Capacity: Unit 9 1000 MW; Unit 10 1000 MW
  • Type: Ultra-supercritical
  • Projected in service: Unit 9: 2023; Unit 10: 2024
  • Coal Type: Subbituminous
  • Coal Source:
  • Source of financing: Unit 8 - China Ex-Im Bank (US$280 million)[31]; Units 9-10 (US$2.6 billion): Korea Export Import Bank, Korea Development Bank[22] Other confirmed lenders are DBS, Hana Bank of South Korea, Bank Mandiri, Bank Negara Indonesia, Exim Bank of Indonesia, Maybank, CIMB and Bank of China[27]

Articles and resources

References

  1. 1.0 1.1 1.2 1.3 1.4 Warga Suralaya Keluhkan Pembangunan Unit 9 & 10 Indonesia Power FaktaBanten, Dec. 3, 2017.
  2. 2.0 2.1 Indonesia Power Completes the Two-Unit Auction of Suralaya Power Plant CNN Indonesia, Sep. 20, 2017.
  3. "Suralaya Coal Power Plant Indonesia," Global Energy Observer, accessed December 2013
  4. Proyek PLTU 1 Banten, Suralaya, PT PLN website, accessed Mar. 2015.
  5. Udiklat Suralaya, PT PLN website, accessed Mar. 2015.
  6. PLTU Suralaya meledak, Cilegon gelap gulita, Merdeka, 1 Dec. 2013.
  7. Trafo PLTU Suralaya yang Terbakar Berumur 30 Tahun, Liputan 6, 2 Dec. 2013.
  8. "Suralaya Coal Power Plant Indonesia," GEO, accessed July 2015
  9. “Rencana Usaha Penyediaan Tenaga Listrik, PT PLN (Persero), 2016-2025,” Kementerian Energi Dan Sumber Daya Mineral, June 2016
  10. Project Unit 9 and 10 Suralaya Power Plant with Capacity of 2,000 Megawatts, Built Over 3 Years, BantenNews, Oct. 6, 2016
  11. Suralaya Power Plant Projects 9 and 10 Start Construction Mid-2018, Dunia Energi, Mar. 25, 2018
  12. Rencana Usaha Penyediaan Tenaga Listrik (RUPTL) 2017-2026, PT PLN Persero, p. VI-53
  13. Rencana Usaha Penyediaan Tenaga Listrik (RUPTL) 2017-2026, PT PLN Persero, VI-11 and VI-53
  14. "EPC shortlisted for Java 9&10 IPP," PFI Issue 618, February 7, 2018 (paywall)
  15. BRPT berkomitmen tuntaskan proyek pembangkit listrik Jawa 9 dan 10, Kontan, Sep. 13, 2018
  16. Barito Pacific menargetkan financial close PLTU Jawa 9 dan 10 akhir tahun ini, Kontan, May 15, 2019
  17. Rencana Usaha Penyediaan Tenaga Listrik (RUPTL) 2019-2028, PT PLN Persero, V-43
  18. Pembangunan PLTU Suralaya Unit 9 dan 10 Dimulai Januari 2020, Liputan 6, Sep. 24, 2019
  19. Calon Kreditor PLTU Jawa 9 dan 10 Digugat di Pengadilan Korsel], Tempo.co, Aug. 30, 2019
  20. Health Impacts of Units 9·10 of the Jawa Coal-fired Power Plant in Banten, Indonesia], Greenpeace East Asia Seoul office, November 2019
  21. Izin PLTU Jawa 9 & 10 yang Diterbitkan Wahidin Halim Cacat Hukum, WALHI: Proyek Ini Hanya Akan Mendatangkan Mudarat, Banten Hits, Aug. 6, 2020
  22. 22.0 22.1 Activists urge end to South Korean funding of Indonesia coal plants, Mongabay, Nov. 16, 2018
  23. "After two years of talks, PLN hopes to secure $3.5b for two UST power plants,", The Jakarta Post, Sep. 25, 2019
  24. Lenders join Indonesian coal-fired financing, IJGlobal, Mar. 27, 2020
  25. Tim Ha, Proposed Indonesian coal power plant not financially viable, study finds, Eco-Business, Jun. 19, 2020
  26. Korea's Kepco Moves Ahead With Controversial Coal Investment, canada.com, Jun. 30, 2020
  27. 27.0 27.1 "Jawa 9 and 10 debt signed", TXFNews.com, Jul. 16, 2020
  28. Tim Ha, "South Korea proposes ban on overseas coal financing", Eco-Business, Jul. 30, 2020
  29. Civi Jap, "Bangkok Bank approves loan to Barito Pacific", IJGlobal, Aug. 10, 2020
  30. Barito Pacific (BRPT) akan mengucurkan pinjaman US$ 252 juta untuk PLTU Jawa 9 dan 10, Kontan, Jul. 17, 2020
  31. "China's Global Energy Finance," BU, accessed October 2018

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