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Business

Japan banks to back Indonesian geothermal power project

Part of Japan's plan to boost infrastructure exports

TOKYO -- The Japan Bank for International Cooperation and the country's three megabanks will provide financial support for an Indonesian geothermal power plant planned by Sumitomo Corp., as Japan pushes infrastructure exports as a key growth strategy.

JBIC, together with Mizuho Bank, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corp., will offer a syndicated loan with the Asian Development Bank. The sum will total around $440 million, of which JBIC will cover roughly $200 million. Nippon Export and Investment Insurance will insure loans provided by the megabanks.

Sumitomo will break ground on the 80-megawatt plant in March, and plans to begin commercial operations in 2019. Fuji Electric will supply the plant's main parts such as steam turbines and power generators. Sumitomo will handle surveying of the project area, as well as operations and maintenance after construction is completed. It is the first time that Sumitomo, a trading house, will run a geothermal power plant.

The project's cost is estimated at 70 billion yen ($610 million), of which Sumitomo will invest around 35%. Indonesia's Supreme Energy and France's Engie will also participate.

Electricity from geothermal energy is generated using underground heat or steam. The Indonesian government is pushing development of the energy source. The volcano-rich country ranks within the world's top five for reservoirs of geothermal energy.

(Nikkei)

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