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Indonesia's Pertamina sews up $1.8bn power plant deal

At 1,760 megawatts, gas-fired station will be one of Asia's largest

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A view of Indonesian energy company Pertamina's refinery in Balongan, Indramayu, West Java.   © Reuters

JAKARTA -- Indonesian state oil company Pertamina on Tuesday said it has struck a $1.8 billion deal with national electric utility PLN to build a gas-fired power plant and related infrastructure in West Java.

The two parties have signed a power purchase agreement, through which PLN will buy electricity from the 1,760 megawatt plant for 25 years, following its planned completion in 2021. Pertamina holds a 40% stake in the joint venture that will develop the project, Jawa Satu Power, while Japanese trading houses Marubeni and Sojitz own 40% and 20%, respectively.

A floating storage and regasification unit, or FSRU, will also be built.

The power station will be one of the largest gas-fired plants in Asia. Gas will be supplied from the FSRU, a vessel-type offshore facility that stores and re-gasifies liquefied natural gas before the fuel is carried inland.

The consortium is negotiating with the Japan Bank for International Corporation and other foreign lenders to secure funding.

The Indonesian government aims to add 35,000MW of generation capacity in the period from 2015 to 2019. To achieve this, it is tapping energy sources beyond coal, which accounts for the majority of the country's power supply. Bringing in foreign investors with funds and technology is also a key part of the plan.

The Pertamina consortium beat rivals, such as local coal producer Adaro Energy, to win the tender last October. But Pertamina said disagreements with PLN over the details resulted in tough negotiations toward the power purchase deal.

Nikkei staff writer Erwida Maulia in Jakarta contributed to this story.

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