Bangko Tengah (SS-8) power station

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Bangko Tengah (SS-8) power station, also known as South Sumatra 8 or Sumsel-8, is a proposed 2,520-megawatt (MW) coal-fired power station near the Tanjung Enim coal mine in South Sumatra Province, Indonesia.

Location

The map below shows the location of the Tanjung Enim open-pit coal mine, in Muara Lenim and Lahat Regencies, South Sumatra Province. Satellite photography from Planet shows construction occurring between March 2019 and June 2019.

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Background

In March 2005 there was a high level meeting between China Huadian Corporation (CHD) officials and the head of the state-run electricity company, PT PLN. The following month CHD signed a Memorandum of Understanding with the governor of South Sumatra, Mr.Syahrial Oesman, for the development of a 4X600MW mine mouth power station in South Sumatra. A few months later the formal Memorandum of Agreement was signed with the Indonesian President, Susilo Bambang Yudhoyono and Chinese vice premier Zeng Peiyan at a business luncheon. Signing the agreement were Mr. He Gong, the president of China Huadian Corporation, Mr. Eddie Widiono, the president director of Indonesian state-run electricity company PT PLN, Mr. Ismet Harmaini, president of Indonesian state-run coal company PTBA and Mr. Hendrik Tee, president of Indika. "This project is to be developed by 55% majority holding of China Huadian corporation," a CHD media release stated.

Phase I

In a 2009 investor presentation PT Bukit Asam stated that the negotiation of a Power Purchase Agreement (PPA) with PLN "is in process" and stated that the commissioning date would be 2013. In its 2009 annual report Bukit Asam stated that the project was aimed at catering for demand in Java and Sumatra. However, the Power Purchase Agreement for the project has not been agreed to by PLN, the government-owned power company. An October 2010 JP Morgan research report referred to the project as having stalled. The plant was proposed to be built adjoining the Tanjung Enim mine.

In December 2011, PT Bukit Asam Tbk (PTBA), a state-owned coal mining company, announced plans to build the first two 660-MW units of the Bangko Tengah mine-mouth coal plant in Tanjung Enim, South Sumatra. The plant will be built by Bukit Asam with China Huadian Corporation; Bukit Asam has a 45% stake while China Huadian has 55%. Construction was scheduled to begin in late 2012. The first unit of the plant was projected to operate June 2016, followed by unit 2 in September 2016.

According to a November 2013 report, the project backers were still seeking funding for the Phase I project, which was expected to cost US$1.59 billion. Representatives of Bukit Asam said that they were exploring a loan from a bank in China.

In 2014, PTBA stated that the Phase I project was in the final stages of financial closing, with financing expected to be finalized by the end of 2014. Construction would begin in 2015, and would last 36 months, with completion in 2018.

In March 2015, PTBA announced that it planned to sign the final cooperation agreement for the plant's construction in China by the end of the month. President Joko Widodo would accompany company representatives to China for the signing.

On March 27, 2015 Bukit Asam announced that it had finalised the terms for a $1.2 billion loan from the Export-Import Bank of China. The company stated that it has entered into a 25-year power purchase agreement with PLN, Indonesia's state-owned electricity company with Bukit Asam to supply 5.4 million tons of coal to Huadian Bukit Asam. Nikkei Asian Review reported that the loan would run for ten years, with a grace period of 45 months. With the loan covering 75% of the estimated $1.59 billion project, the balance of the costs are to be funded via equity. In its media release Bukit Asam stated that it is aiming to have the finances in place by the end of 2015 with construction to commence early in 2016. The plant has a target commissioning date of mid-2019.

On November 7, 2015, South Sumatra Governor Alex Noerdin conducted a groundbreaking ceremony at the project site.

In June 2016 and December 2016 it was reported that construction was expected to begin soon. However, on November 2, 2016, the Java-Sumatra HVDC Interconnection System, a HVDC (high voltage direct current) underwater line between Sumatra and Java, was placed on hold for at least two years. This line would have supported the transfer of 3,000 MW of capacity from three mine-mouth plants in Banko Tengah. Due to the delay of the HDVC line, the Bangko Tengah (SS-8) project is currently shelved while new power purchase arrangements are developed.

In January 2017 it was announced that the target construction date had been pushed back to 2022. PLN President Director Sofyan Basyir said that electricity from the mine mouth was originally to be delivered through undersea cable high voltage direct current (HVDC) from Sumatra to Java island. However, based on PLN’s calculation, the electricity reserve margin on Java Island is above 30%, while Sumatra has a deficit of more than 30%. Therefore, the electricity from Sumsel-8 will be delivered to Sumatra. In the 2018-2027 and 2019-2028 long-range plans there are two units of 600 MW each listed for completion in 2022 and 2023, respectively.

In April 2019 there was a report that construction on Unit 1 began in Q3 of 2018, and another report that both units were under construction as of March 2019. In October 2019 construction of the two units was reported to be 25% complete.

Phase II

The project has frequently been mentioned as a two-stage project, with two additional 660-MW coal-fired units being built at a later date. However, PLN's 2015-2024 supply plan does not show these units. Nor does PLN's 2016-2025 supply plan mention the units. They appear to be abandoned.

Mine

In 2010 the China Railway Group (CRG) was awarded a US$4.8bn contract to build and operate a 307km coal railway line from PT Bukit Asam (PTBA)'s Banko Tengah coal mine in South Sumatra to Srengseng in Lampung province, Indonesia. The contract includes US$1.3bn for the construction of the railway and US$3.5bn for operating and maintaining the railway over 20 years. The project, which is scheduled to be completed in 2014, is slated to transport 27 million tons of coal per year. Business Monitor International reported that "the contract was awarded to the CRG by PT Bukit Asam Transpacific Railway, a joint venture (JV) company formed of PT Transpacific Railway Infrastructure (80%), which is owned by Indonesian tycoon Prajogo Pangestu, and PTBA (10%). The final 10% stake is owned by a Chinese railway company, although it is unclear from press reports if this stake belongs to China Railway Group or China Railway Engineering Corporation."

Funding

On March 27, 2015 Bukit Asam announced that it had finalised the terms for a $1.2 billion loan from the Export-Import Bank of China. Nikkei Asian Review reported that the loan would run for ten years, with a grace period of 45 months. With the loan covering 75% of the estimated $1.59 billion project, the balance of the costs are to be funded via equity. In its media release Bukit Asam stated that it is aiming to have the finances in place by the end of 2015.

In May 2018 Bukit Asam signed the US$1.26 billion bilateral loan with the China Export Import Bank to finance the development of the US$1.6 billion Sumsel 8 power plant. The loan, which is based on 75:25 debt-to-equity ratio, has a tenor of 15 years with a grace period of five years. Margin is reported to be 285bp over Libor.

Project Details

• Sponsor: Huadian Bukit Asam Power
• Parent company: China Huadian (55%), Bukit Asam (45%)
• Location: Tanjung Enim open-pit coal mine, Muara Lenim or Lahat Regencies, South Sumatra Province, Indonesia
• Coordinates: -3.838679, 103.804133 (exact)
• Status: Construction (Units 1 & 2); Cancelled (Units 3 & 4)
• Gross Capacity: Unit 1: 600 MW; Unit 2: 600 MW; Unit 3: 660 MW; Unit 4: 660 MW
• Type:
• Projected in service: Units 1: 2021; Unit 2: 2022
• Coal Type:
• Coal Source: Tanjung Enim mine
• Source of financing: Export-Import Bank of China (US$1.26 billion)

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