This article first appeared in The Edge Financial Daily, on November 12, 2015.

KUALA LUMPUR: Mudajaya Group Bhd’s 46%-owned associate, PT Harmoni Energy Indonesia (PT HEI), has achieved commercial operation date for its 2 x 7mw coal-fired steam power plant in Desa Baruta Analalaki, southeast Sulawesi, Indonesia on Oct 29.

The 2 x 7mw coal-fired steam power plant is developed on a build-operate-own concept subsequent to PT HEI entering into a power purchase agreement for a period of 25 years from the commercial operation date with PT PLN (Persero) Wilayah Sulawesi Selatan, Sulawesi Tenggara Dan Sulawesi Barat (PLN) in July 2011.

“This investment will provide a recurrent income stream to the group and is expected to contribute positively towards the earnings and net assets of the group for the current and future years,” said Mudajaya in a filing with Bursa Malaysia yesterday.

In a separate statement, Mudajaya group managing director and chief executive officer James Wong Tet Foh said the successful commissioning and commercial operations of the coal-fired steam power plant mark a milestone for the group’s foray into the power sector in Indonesia.

“The debut of this plant marks a game changer for the local community as this plant will augment the existing power plants that are operated using diesel engines within the Bau Bau and Buton region in southeast Sulawesi.

“We note that it is PLN’s objective in the long run to increase electricity output using more efficient coal-fired power plants for this region compared to diesel power plants, as illustrated by the Baruta coal power station,  which could save about 23,600 kilo litres per year of high-speed diesel,” Wong added.

He noted that with the development of a proposed special economic area within this region, coupled with the year-on-year growth in demand for power, there will be a need for additional coal-fired power plants in the near future.