SCB Going for Hydro Dam Jobs with Indonesian Partner.

The Star Online – Tuesday, 2 June 2015 By JACK WONG

KUCHING: Sarawak Cable Bhd (SCB), in partnership with Indonesian utility body Perusahaan Listrik Negara PT (PLN), is expected to develop two more mini hydroelectric dam projects in north Sumatra.

Their first joint-venture (JV) 10MW hydro power plant project in north Sumatra is due for completion and testing later this year for scheduled commissioning in January 2016. Managing director and chief executive officer Aaron Toh Chee Ching said feasibility studies on the proposed two hydro dams – one with an installed capacity of 14MW and the other with 15MW along Ordy River – had been completed.

“We are negotiating with PLN on a power purchase agreement (PPA) for the sale of 10MW each to be generated by the two hydro dam projects. The PPA is expected to be concluded in three to six months’ time. The local authorities have approved both projects.

“Based on our studies, each proposed hydro power plant will cost some RM60mil to build. The construction of each dam will take 18 months and an additional two months for testing and commissioning,” Toh told reporters when announcing SCB’s quarterly results.

For the first quarter ended March 31, the SCB group’s profit soared to RM11.9mil from RM1.36mil in the previous corresponding quarter, while revenue jumped to RM343.6mil from RM79.2mil. Toh said SCB, the first foreign company to invest in a power plant project in north Sumatra, would hold a 65% equity interest while PLN 35% in the two JV hydro dam projects.

Bank of China, he said, is keen to offer US-dollar loans to SCB to finance its proposed investments in the two dam projects. SCB’s 78.3%-owned Indonesian unit, PT Inpola Mitra Elektrindo (IME), is developing the first hydro power plant project at an estimated cost of RM80mil.

“We are very excited to get this first hydro power plant commissioned. PLN has twice revised the tariff to an average of 1,160 rupiah per kilowatt hour (kWh) from the original average 768 rupiah under the PPA. The first revision raised the tariff to an average 968 rupiah per kWh. We will sell the electricity at 1,160 rupiah per kWh.”

Under the PPA, IME will sell the electricity to PLN for 20 years, with the concession being renewable.

“Based on the revised tariff, we can recoup our investment in the power plant project in four to five years instead of six years as originally estimated,” said Toh, adding that the rationale for PLN to raise the tariff was to make it more attractive for foreign companies to venture into power generation in Indonesia.

A third tariff revision, it is understood, could be on the cards in the middle of next year. Toh said it was crucial for north Sumatra to increase its power generation capacity to cater for demand due to rapid development, especially the plantation sector, increase in population and living standard of the people, and to address frequent power blackouts like in Medan.

“As north Sumatra has the biggest potential to offer us the highest tariff, SCB plans to build up to 100MW of hydro power within five years,” said Toh, adding that the company had also been offered to invest in a proposed 40MW hydro project.

According to him, new Indonesian president Joko Widodo had instructed PLN to build up a new power-generation capacity of 7,000MW a year in the next five years (total 35,000MW) in hydro, coal-fired and diesel to meet the higher demand in view of the country’s rapid economic development.

PLN is scheduled to import 230MW of renewable energy from state-owned Sarawak Energy Bhd, the second-largest shareholder of SCB, from early next year.