Power Industry

DH Energy faces financing hurdles:

* DH Energy is currently experiencing difficulties in securing the necessary funds for its 600 MW Mine Mouth Sumsel 6 power plant project

* After talks with several export credit agencies and commercial banks the consortium () is able to attract just one interest letter from a local bank

* In spite of having sufficient coal resources for the life of the plant, government guarantee is considered as an important key element to encourage lending institutions for providing funds.

* Analysts argued that financiers are still feeling dicey with Indonesia electricity generation sector, nevertheless Indonesian government represented by Ministry of Finance, has been trying to create a better climate to enthrall investors.

* In the last three years, the Indonesian government has stipulated several regulations to make infrastructure projects more attractive. Indonesia government enacted a Public Private Partnership (PPP) scheme and established the Indonesia Infrastructure Guarantee Fund (IIGF).

* These are expected to provide better assurance for investors particularly in power generation project.

* Sumsel 6 DH Energy project is not included in the PPP scheme because IIGF was not ready

* PT Dian Swastika Sentosa, winner of Sumsel 5 project, has successfully secured USD 318 Mn loan from China Development Bank

* Calorific value of DH Energy’s coalmine is 2400 Kcal/Kg

* DH Energy along with Korea-based Posco was awarded the Sumsel 6 contract in February 2012 and the expected operational time was December 2016. Projected investment needed for Sumsel 6 is around USD 1 Bn

Table 1: Overview of Sumsel Power Plants

Description | Sumsel 5 | Sumsel 6 | Sumsel 7 | Sumsel 8 |

Capacity | 2 x 150 MW | 2 x 300 MW | 2 x 150 MW | 2 x 620 MW |

Basis of PPA | IPP | IPP | IPP | IPP |

Investment required (USD Million) | 485 | 500 | 455 | 1590 |

Company/ consortium developing the project |...