Construction for 80 MW Muara Laboh geothermal plant starts in West Sumatra

Construction for 80 MW Muara Laboh geothermal plant starts in West Sumatra Drill site at Muara Laboh project, West Sumatra/ Indonesia (source: ENGIE)
Alexander Richter 27 Mar 2017

Construction for the 80 MW Muara Laboh geothermal power project has officially started in West Sumatra, Indonesia. The plant will be built by Sumitomo, with turbines from Fuji Electric for the joint venture of PT Supreme Energy and French company Engie.

Japanese Sumitomo Corp. and French Engie have announced having started the construction of the 80 MW Muara Laboh geothermal power project in the province of West Sumatra in Indonesia.

With fulfilling the required conditions precedent for project financing, the project officially commenced construction on 24 March 2017. We previously reported on the financing of the project.

No Japanese company has ever been involved in the development of an Indonesian geothermal power project from as early a stage as Sumitomo Corporation has in the Project. Under a long-term power purchase agreement for 30 years with the project company PT. Supreme Energy Muara Laboh and PT. PLN (Persero), the Indonesian state-owned electricity utility, the Project will be able to offer a generation capacity of 80 MW. Total costs will amount to approximately JPY 70 billion ($630 million), and commercial operation is scheduled to commence in October 2019.

The engineering, procurement and construction (EPC) contract was awarded to the consortium of Sumitomo Corporation and PT. Rekayasa Industri, with the main equipment such as geothermal steam turbine and generator to be supplied by Fuji Electric Co., Ltd. In addition to capital investments, the Project will be co-financed through project financing by Japan Bank for International Cooperation (JBIC), Asian Development Bank (ADB), Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi UFJ, Ltd., and the Leading Asia’s Private Infrastructure Fund (LEAP: A trust fund jointly established by ADB and the Japan International Cooperation Agency (JICA)). Financing by Japanese commercial banks will be covered by overseas untied loan insurance offered by the Nippon Export and Investment Insurance (NEXI). The Project is thus being undertaken by the consolidated efforts of Japanese companies.

Sumitomo Corporation and its wholly-owned subsidiary, Sumisho Machinery Trade Corporation (SMT), have been involved in about 50% (769 megawatts) of all completed geothermal power projects in Indonesia (1,616 megawatts) in terms of generation capacity.

Source: Sumitomo