International Power has signed a power purchase agreement for Indonesia’s Paiton 3 power plant, a key project in the Java-Bali grid.
The Paiton 3 power project will comprise a single 815 MW supercritical coal fired unit and is scheduled to start operations in 2012. It will sell its output to state utility PT PLN (Persero) under the 30-year PPA.
The new plant will be located within the existing Paiton complex and is being developed by PT Paiton Energy, which is owned by International Power, Mitsui, Tepco and PT BHP. It will be operated by PT IPMOMI, which operates the existing Paiton complex and in which International Power has a 59.9 per cent interest.
The project has a fixed price contractual arrangement, with the main equipment supplied by Mitsubishi Heavy Industries, Ltd. As a result of its close proximity to the existing plant, Paiton 3 will benefit from shared facilities such as the coal jetty, coal stockyard and waste water treatment plant.
International Power estimates the total project cost to be $1450 million, which will be funded by a mix of project finance debt and equity in line with comparable long-term PPA projects in the region.
“Strong economic growth in Indonesia has led to a significant increase in power demand and a requirement for new generation capacity,” said Philip Cox, CEO of International Power. “The Paiton 3 project will provide much needed additional capacity on the key Java-Bali grid, and will deliver an attractive return on investment for our shareholders.
“This project demonstrates International Power’s ability to capitalise on opportunities in emerging markets.”
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