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Infrastructure & PPPs in Indonesia - Q2 2023 Update

YOG INFRA Q2 2023 insight series

INDONESIA is seeing investments in clean energy sectors from internaitonal developers and DFIs, including in battery hybrids and green hydrogen & ammonia sectors. PLN, the national utility of Indonesia, is taking steps to replace diesel generation with solar-battery projects in the country with an objective to have a greener portfolio. Further, DFI support through initiatives like ETM would continue to play a role in lowering the dependence on coal-fired power in the country.

Read more about key developments in Infrastructure and PPPs in Indonesia in our latest insight.

 

April 2023

MERALCO POWER GENERATION UNIT MULLS INDONESIA SOLAR BATTERY PROJECT

Meralco PowerGen Corp. (MGen), the power generation arm of Manila Electric Co., is looking at putting up a solar-battery project in Indonesia, the output of which will be exported to Singapore. The plan is still in the early stages and the targeted capacity of the plant is more than 300 megawatts (MW) given the sizeable investments needed for the submarine cables that will be used to export the power. The plant would be owned by PacificLight Power Pte. Ltd. (PLP) in partnership with an Indonesian company.


RESERVOIR LINK ENERGY UNIT AWARDED WASTEWATER PROJECT IN INDONESIA

Reservoir Link Energy Bhd has entered into an agreement with PT Unilever Oleo chemical Indonesia (PTUOI) for the right to undertake construction, commissioning, and operations of a new wastewater treatment plant in PTUOI’s premises located in Sei Mangkei, North Sumatra, Indonesia. The tenure for the agreement will be for 10 years starting from the date of commercial operations.

Under the agreement, Reservoir Link will deploy a “build, own, operate and maintain” model. The new wastewater treatment plant will be integrated with the existing plant for the receipt and treatment of effluent inputs and discharge of effluent outputs.



May 2023

JBIC SIGNS HYDROGEN AND AMMONIA DEAL WITH PUPUK INDONESIA

The Japan Bank for International Cooperation (JBIC) signed a memorandum of understanding (MOU) with PT Pupuk Indonesia (Persero). The objectives of the MOU include promoting cooperation in sectors that use hydrogen and ammonia as a fuel source.

The framework for collaboration between the two organizations is to be developed, where JBIC aims to accelerate the structuring of projects for developing the supply chain of hydrogen and ammonia as a fuel source. The signing of the MOU will also contribute toward promoting multiple initiatives, including the Asia Zero Emissions Community (AZEC) Concept, through, for example, securing the production bases and supply chain of hydrogen and ammonia.


JAPAN TO PARTICIPATE IN INDONESIA’S NEW CAPITAL CITY DEVELOPMENT

Japan and Indonesia have signed agreements on the development of the planned new capital city, Nusantara, of the Southeast Asian country. Indonesia State Capital Authority (OIKN) has signed 5 memoranda of understanding with Japanese agencies and companies as well as 24 letters of intent with Japanese businesses.

The Japan International Cooperation Agency (JICA) is providing investment support, especially for infrastructure in Nusantara (IKN). These include Balikpapan Airport revitalization works and the energy industry, focused on power supply infrastructure.


TOTAL EREN AND PARTNERS SIGN 70 MW INDONESIA WIND PPA

Indonesian national electric utility Perusahaan Listrik Negara (PLN) has signed a power purchase agreement (PPA) with the developers of a 70 MW wind power project in Indonesia's South Kalimantan province. The project developers include France's Total Eren, Indonesian energy company Adaro Power and Pembangkitan Jawa BaliInvestasi (PJBI).

Total Eren will own 42% of the project while Adaro will own 28% and PJBI 30%. The project includes a 70 MW wind generation facility as well as a battery energy storage system with a capacity of 10 MWh and will be located in the Tanah Laut area of South Kalimantan. Construction of the project is expected to start in the beginning of 2024 and start operating in 2025. And will strengthen the electricity supply in the Kalimantan interconnection system.


CHINA ENERGY AND INDONESIA'S PLN TO CO-DEVELOP POWER PROJECTS

China Energy Engineering Corporation (CEEC) and Indonesian state utility Perusahaan Listrik Negara (PLN) will co-develop energy projects in Indonesia. The pair will team up on hydropower, wind, solar, power storage, geothermal, power transmission, coal-fired power as well as green hydrogen and ammonia projects in Indonesia. PLN Indonesia Power signed an agreement with CEEC and the Huabao Industrial Park in Central Sulawesi to collaborate on hydropower, solar, and other renewable power projects.

Huabao Industrial Park is a Chinese-invested industrial park featuring ports, utilities, and energy infrastructure. CEEC plans to build large-scale captive clean energy projects to sell electricity solely to the power users in the industrial park. PLN expects CEEC to participate in Indonesia’s energy transition and engage in the country’s 2030 power development agenda. Indonesia has a target to reach net zero emissions by 2060.


PLN TO SPEND USD 700 MN TO INCREASE SOLAR CAPACITY, REPLACE DIESEL

Indonesia-based Perusahaan Listrik Negara (PLN), a state-owned utility, is planning to install around 200 MW of solar photovoltaic (PV) capacity in a move to replace existing diesel power generators. The project is estimated to cost around USD 700 Mn.

The move part of a long-term plan to replace 1 GW of diesel power plants in Indonesia. By 2025, PLN also aims to expand its renewable energy (RE) capacity to 18.5 GW. By 2030, capacity will be further increased to 28.8 GW.


BALI LRT APPROVED, WORK ON BATAM LRT TO START IN 2024

The Ministry of Transportation (MOT) and the Ministry of National Development Planning (Bappenas) have approved the development of the Bali Light Rail Transit (LRT) project in Indonesia. The LRT line will span 9.46 km from Ngurah Rai International Airport to Seminyak, on a partly underground and partly elevated track and have four stations.

The project will be developed at an estimated investment of IDR 10 Trn (USD 666.8 Mn). It is expected to be completed by 2027. The LRT project will be developed by the Provincial Government of Bali in collaboration with the Government of South Korea, which will provide technical assistance and funding through a soft loan scheme.



June 2023

INDONESIAN INFRA GUARANTEE FUND PARTNERS WITH LENDER FOR PPPS

Penjaminan Infrastruktur Indonesia (PII), or the Indonesia Infrastructure Guarantee Fund, will jointly develop a financing mechanism with the Regional Development Bank West Java and Banten (Bank BJB) to support public-private partnerships(PPP). The parties signed an agreement to launch capacity building programmes.

PII has formed the PPP Smart Hub, a platform to encourage small projects, including in the areas of streetlighting, hospitals, bridges and drinking water supply systems. The vehicle will also aim to build an innovative financing ecosystem to help investors and lenders to jointly prepare more PPPs of better quality. PII is currently providing transaction assistance in 11 infrastructure PPPs, including the Singkawang Airport, Zainoel Abidin Aceh Hospital and Makassar–Parepare Railway projects.

 

List of Key Transactions - Indonesia Q2-2023


Source: YOG INFRA analysis, Subscription databases

 

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