China Gezhouba Group Corp, the parent of the Three Gorges Dam builder, plans to invest $1 billion to build a hydroelectric power plant in Indonesia’s Sulawesi Selatan province. The move is part of a strategy to consolidate the company’s presence in Indonesia’s utility sector.
Gezhouba, a leading Chinese hydroelectric construction company, signed an agreement with PT Perusahaan Listrik Negara (PLN), Indonesia’s state electricity monopoly, to build a plant in Karama on Sulawesi Island, according to a source participating in the project , who didn’t elaborate on the generating capacity of the plant.
The deal, along with another Gezhouba deal for a coal-fired power plant in West Kalimantan, was signed during Premier Wen Jiabao’s state visit in late April, during which Wen pledged $19 billion of investment credit to Indonesia.
“Construction on the project, in which Gezhouba will serve as an independent power producer (IPP), will begin in 2012 and is expected to be completed by 2017,” the source said, adding that based on the agreement, electricity generated by the plant will only supply PLN.
The duration of the power supply contract, expected to last for 20 or 30 years, has not yet been determined, the source said.
Indonesia intends to cut its carbon emissions by 26 percent by 2020, compared with 2005, and has accelerated the pace of its efforts to develop clean energy. A hydroelectric plant fits perfectly with the country’s demands, analysts said.
In addition, the biggest economy in Southeast Asia, with a population of more than 242 million, experienced a serious electricity supply shortage during its rapid 6.1 percent economic expansion in 2010.
Chinese power plant builders emerged as an influential player in Indonesia in 2006, when that country launched the first phase of its 10 million kilowatts power plant projects. Ultimately, almost 90 percent of the projects were awarded to Chinese firms.
Since then, Chinese power plant builders have gradually surpassed their Japanese and South Korean peers to become Indonesia’s biggest player in the sector by project numbers, said Li Chengye, assistant to the president of China National Electric Engineering Co Ltd.
That company has three power plant projects in Indonesia either completed or under construction.
“At present, 80 percent of the power plants under construction in Indonesia are controlled by Chinese companies,” Li said.
