Medco Ratch Power Riau in Tenayan, Pekanbaru Riau - Photo by MPI

JAKARTA (TheInsiderStories)PT Medco Power Indonesia (MPI), has won two coal-fired power plant projects, the company announced today (08/27). The two projects are Sulut-1 with capacity 2×50 megawatts (MW) located in Bolaang Mangondow, North Sulawesi and Timor-1 in Kupang, East Nusa Tenggara, have same capacity 2×50 MW.

Eka Satria, President Director of MPI said in an official statement, under these contracts, the unit of PT Medco Energi Internasional Tbk (IDX: MEDC), will operate and provide maintenance services of the power plants for five years with an option to extend up to 40 years.

The company joined with two local partners, PT Inti Karya Persada Tehnik and PT PP Tbk (IDX: PTPP) to build the power plant. While, Japanese companies, ITOCHU Corp., and Sumitomo Heavy Industries, act as the EPC contractor.

The project development will begin at the end of 2019 and targeting to start commercial operation in the third quarter of 2022.

Months ago, Medco Power has signed a Credit Agreement for a facility of US$222 million originating from an international consortium consisting of Asian Development Bank (ADB), International Finance Corporation, MUFG Bank Ltd., and Sumitomo Mitsui Banking Corporation. This loan has a loan term of 20 years.

The total funding represents 76 percent of the total investment value of $293 million used for the construction of the 275 MW steam power plant project in Riau.

The construction of the project began in the third quarter of last year and currently, the project progress has reached 24 percent with the target of fulfilling COD in May 2021. After operating, Medco Power will also act as an Operation and Maintenance Contractor.

“The signing of this Credit Agreement shows more confidence from international financial institutions in Medco Group’s reputation for completing large projects in Indonesia,” said Satria.

In terms of the project itself, the plant is expected to be able to increase power supply by 275 MW into the Sumatra electricity grid and can help meet the target of increasing electrification in the Riau region.

Last week, its parent company prepared an initial public offering for Medco Power and PT Amman Mineral Nusa Tenggara (AMNT). Director Finance and International Planning MedcoEnergy Anthony Mathias said had appointed JP Morgan to find the strategic investor for Medco Power to help gas conversion into liquefied natural gas.

MPI is the subsidiary of MedcoEnergy with the ownership of 100 percent. Currently, Medco Power is managing several gases, geothermal and water power plants.

While, Medco officially controlled 50 percent of PT Amman Mineral Investama (AMI) shares on Nov. 3, 2016. AMI is an indirect controller of 82.2 percent of AMNT which controls the Batu Hijau copper and gold mine in the Sumbawa Islands.

On the other hand, Medco has completed the British’ Ophir Energy Plc acquisition and synergize its businesses and is expect to escalate the efficiency around $30 million per year. With this efficiency, the company’ profit is expected to jack up in this year.

In this year, MedcoEnergy give a guidance , the oil and gas production could reached 100 MBOPED, within Ophir pro forma 110 MBOPED. MPI will generate power sales of 2,710 GW. For this year expanstion, Medco has prepared capital expenditure $350 million and net debt to EBITDA target of 3.0x or below.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com