By Romel S. Gurky
INPEX Corporation and its partners have reached a final investment decision (FID) for the expansion of the Muara Laboh geothermal power project in Indonesia, alongside the signing of a project finance agreement. The project, located in the Solok Selatan region of West Sumatra, aims to nearly double its current power generation capacity from 85 MW to approximately 170 MW by 2027.
The expansion is being spearheaded by PT Supreme Energy Muara Laboh (SEML), a joint venture involving INPEX, Sumitomo Corporation, and PT Supreme Energy. INPEX holds a 30% participating interest through its subsidiary, INPEX Geothermal, while Sumitomo Corporation and PT Supreme Energy hold 50% and 20% stakes, respectively.
The financing package, valued at approximately ¥70 billion (US$490 million), includes contributions from financial institutions such as the Japan Bank for International Cooperation (JBIC), the Asian Development Bank (ADB), and private Japanese banks, including Mizuho Bank, Sumitomo Mitsui Banking Corporation, MUFG Bank, and The Hyakugo Bank. Private loans are insured by Nippon Export and Investment Insurance (NEXI).
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Construction of the second unit, which will be adjacent to the existing facility, is scheduled to begin in March 2025, with commercial operations targeted for 2027. The long-term power purchase agreement with PT PLN (Persero), Indonesia’s state-owned utility company, will remain effective until 2052. Upon completion, the combined capacity of Units 1 and 2 is expected to supply electricity sufficient for approximately 900,000 households across Sumatra.
Geothermal energy is a cornerstone of Indonesia’s renewable energy strategy, with the country holding an estimated 28,000 MW of geothermal potential. Despite being the second-largest geothermal resource holder globally, Indonesia has utilized only 10% of its reserves, producing approximately 2,400 MW of geothermal energy. The government aims to increase capacity to 5,800 MW by 2030 as part of its clean energy goals.
Sumitomo Corporation and its consortium partners, including Indonesian engineering firms PT Inti Karya Persada Tehnik and PT Wasa Mitra Engineering, will oversee the engineering, procurement, and construction (EPC) of the plant. Major equipment, such as geothermal steam turbines and generators, will be supplied by Fuji Electric.
Editing by Alexander Ginting
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