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Indonesia's Adaro Energy says power plant on track

BANGKOK -- Adaro Energy's power generation project in the Indonesian province of Central Java is on track after securing necessary financing and regulatory approvals, the company's CEO said.

The 2,000MW coal-fired plant, the first by the coal producer, was delayed for more than four years due to land acquisition issues. However, Adaro has begun clearing land and laying the foundation for construction.

"The progress is in line with the promise to the Indonesian government [to complete it] by 2020," Adaro CEO Garibaldi Thohir said in an interview on Friday. The grid that connects to the power plant will be ready by 2019 "for sure," he told the Nikkei Asian Review on the sidelines of the Nikkei Asia300 Global Business Forum in Bangkok.

In June, Adaro and the consortium in charge, which includes Japan's Electric Power Development and Itochu, signed a $3.4 billion loan to jump-start the project.

The project is part of the ambitious plan by Indonesian President Joko Widodo's government to construct 35,000MW of generating capacity by 2019. Current capacity meets only 90% of demand throughout the Indonesian archipelago.

In the past, such infrastructure projects were often carried out by state enterprises. The current plan opens up opportunities for the private sector to participate, a move that is welcomed by Adaro. "Indonesia needs Adaro, and Adaro needs Indonesia," Thohir said.

Despite the current commodity rout, Thohir said prices of coal will recover as demand is coming from neighboring countries. He said Adaro will "not only survive but run" when prices rise again, due to its stringent cost control measures.

As of last week, prices for Australian thermal coal, a benchmark for Asia, had recovered to $80 a ton, the highest since January 2014.

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