Mudajaya Group Bhd has announced the commercial operation of its coal-fired steam power plant in Desa Baruta Analalaki, South-East Sulawesi, Indonesia.

The company, in a statement to Bursa Malaysia yesterday, said its 46%-owned associate, PT Harmoni Energy Indonesia, had achieved commercial operation on Oct 29, 2015. This was confirmed by PT PLN (Persero) Region of South Sulawesi, East Sulawesi and West Sulawesi on Nov 10.

Mudajaya group MD and CEO James Wong Tet Foh said the successful commissioning and commercial operation of the coal-fired steam power plant mark a significant milestone for the group in its 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 BauBau and Buton regions in SouthEast Sulawesi,” he said at the opening ceremony of the power plant to mark the completion of the construction phase and the beginning of the operation phase.

The 2x7MW coal-fired steam power plant is developed on a build-operate-own concept subsequent to PT HEI entering into a power purchase agreement (PPA) for a period of 25 years from commercial date with PLN in July 2011.

“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 kilolitres per year of HSD (high-speed diesel),” Wong added.

The company said with the development of a proposed special economic region and increase in demand for power, there will be a need for additional coal-fired power plants in the near future.

“The prospects are good for expansion and the group has taken the necessary steps to develop a plant of higher capacity within the vicinity, subject to approvals from the relevant authorities,” Mudajaya said.

The company said the project will provide a recurrent income stream to the group and is expected to contribute positively towards its earnings and net assets.