TOKYO/JAKARTA, April 22 (Reuters) – The Japan Bank for International Cooperation (JBIC) has not decided whether to fund the $4 billion Batang coal-fired power station project in Indonesia, its chief executive said on Friday, following protests by green groups and landowners.
PT Bhimasena Power Indonesia (BPI), a joint venture set up by Indonesian coal miner PT Adaro Energy Tbk and Japan’s Itochu Corp and Electric Power Development Co (J-Power), plans to build and operate the 2,000 megawatt Batang plant in Central Java with funding from JBIC.
Construction was meant to begin in 2012 but has been repeatedly delayed as dozens of landowners refused to give up their paddy fields for the project.
“We haven’t decided to offer a loan to the project,” JBIC CEO Hiroshi Watanabe told reporters, referring to environmental concerns raised by residents.
“Given what happened in Sakhalin, we understand we need to watch the local project construction contractor to ensure they do not harm the environment,” Watanabe added, referring to the construction of the Sakhalin gas project, which raised environmental concerns and eventually led to Japanese companies selling their stakes to Russian gas producer Gazprom.
Getting Batang off the ground has been a top priority for Indonesian President Joko Widodo, who held a ceremony at the plant in August as proof the government was meeting its promises to kick-start badly needed infrastructure projects.
Widodo had promised Japanese investors in Tokyo five months earlier that the land issues were resolved.
If built, the project would be the biggest coal-fired power station of its kind in Southeast Asia.
Indonesian state power company Perusahaan Listrik Negara (PLN), tasked with buying the land for the project, said in March it had won a landholders’ lawsuit at Indonesia’s Supreme Court, paving the way for construction to begin.
Farmers in Batang, however, accuse the developers and security forces of intimidating them, closing community access to their farmland and destroying their irrigation systems and crops before a Supreme Court ruling was issued.
“As of now we haven’t received an announcement of the Supreme Court verdict,” Judianto Simanjuntak, a lawyer for landowners in Batang, told Reuters on Friday, noting that they could not lodge an appeal without this document.
An official at PLN said earlier this month that a financial agreement on Batang would be postponed for two months because of difficulties surrounding funding mechanisms JBIC wanted to use.
Despite the setbacks, Adaro CEO Boy Thohir remained positive about the project, speaking to reporters earlier this week.
“I believe we will have deal on this. We hope this project can be realised soon,” he said.
A spokeswoman for Adaro did not respond immediately to an emailed request for comment on Friday. (Additional reporting by Wilda Asmarini in Jakarta, editing by David Evans)