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Indonesia Jump Starts Rural Electrification Plan

More than four million Indonesian families living in isolated rural, and island locations, will soon have access to reliable, affordable electricity for the first time.

Communities in the remote parts of Lampung, Pontianak, Bangka, Riau, Belitung, Ampenan, Paya Pasir, and Nias provinces, are the beneficiaries of a new energy plan announced by the Indonesian state utility, Perusahaan Listrik Negara (PLN) on December 8, 2016.

Under the PLN plan, GE-powered mobile power plants (MPPs) will be installed in the eight regions which have some of the lowest electrification rates in Indonesia.  The MPPs will be especially welcomed by the people of Nias Island.

Renowned as one of Asia’s best surfing destinations, Nias lost power for 13 days in April last year, when the island’s two 10-megawatt (MW) capacity power plants went down on April 1.

The impact of the blackout was huge. For example, the ice factory, supporting the island’s fishing industry, closed during this period. Clean water supplies were also affected, and many students, including those sitting national exams, were unable to attend school.

When its new MPP is installed, and fully-operational, Nias will have an additional 25 MW of power. The plan for the other provinces is 4×25 MW plants for Lampung, 4×25 MW plants for Pontianak, 2×25 MW plants for Bangka, 3×25 MW plants for Riau, 1×25 MW plant in Belitung, 2×25 MW plants in Ampenan, and 3×25 MW plants in Paya Pasir.

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The mobile power plants to be installed in eight regions will provide
electricity to more than four million Indonesian families.

Powering Indonesia

The MPP project is part of PLN’s commitment to support the government’s goal of installing 35,000 MW of new power capacity by 2019.  In early 2015, Indonesia’s President Joko Widodo pledged to ramp up energy capacity to accelerate economic growth and improve the electrification rate – according to International Energy Agency research, 41 million Indonesians do not have access to electricity today.
The electrification rate is 84% (96% in urban areas and 71% in rural areas).

This deal also supports an agreement signed by PLN and GE in 2015, to produce 500 MW of fast power from MPPs.  In terms of equipment, GE will use smaller-scale, mobile technology for this initiative – primarily, the truck mounted GE TM2500 aeroderivative mobile gas turbine generator that is flexible, efficient, reliable, and can be operational in six months or less.

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Reliable energy will assist the development of many rural industries including fishing, horticulture and farming.

Project financing

PLN secured funding for this project from an export credit agency (ECA) scheme involving Hungarian Export Import Bank Plc. (HEXIM) and Export Development Canada (EDC). The 12-year loan, for approximately $435 million, was signed by PLN’s Finance Director, Sarwono, on Friday, December 2.

“PLN is committed to increasing access to electricity in Indonesia.  As such, we have been utilizing ECA financing, without sovereign guarantee in our financing portfolio, in addition to financing from other bilateral and multilateral institutions,” said Sarwano.

Zoltán Urbán, CEO, HEXIM said the deal proves Hungary can take an important role in the global value chain of the energy sector, while Carl Burlock, EDC Senior Vice-President, Financing and Investments commented, “EDC is very pleased to have participated in arranging financing for this important power project in Indonesia while providing support to our global strategic client, GE.”

GE Energy Financial Services’ Global Capital Markets division served as financial advisor to PLN, and will help bring the respective MPP projects to completion.

David Hutagalung, Country Director, GE Power in Indonesia said, “We are pleased to play a role in developing Indonesia’s power sector, and economy, by providing our technology and financing capabilities to PLN, and its subsidiaries, who will bring much-needed power to the Indonesian people.

“Financing is a critical part of many energy projects.  Given our vast project management experience globally, we can initiate, and manage, the often-complex funding processes required for our customers.  In Indonesia for example, in 2013 we helped facilitate financing from US EXIM bank for PT Kereta Api Indonesia to purchase 150 GE locomotives.”

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