Jan. 14, 2025
Sumitomo Corporation

Loan Agreement Signed for Expansion of Muara Laboh Geothermal Power Project in Indonesia- Project expansion of approx. 70 billion yen aiming to double power generation capacity by 2027 -

Sumitomo Corporation (Head Office: Chiyoda-ku, Tokyo; Representative Director, President and Chief Executive Officer: Shingo Ueno) is participating in the Muara Laboh geothermal power project in West Sumatra, Indonesia (hereinafter the "Project") through PT Supreme Energy Muara Laboh (hereinafter "SEML"), a joint venture with INPEX Corporation (Head Office: Minato-ku, Tokyo; President and CEO: Takayuki Ueda; hereinafter "INPEX") and PT Supreme Energy (Head Office: Jakarta, Indonesia; President and CEO: Nisiryanto; hereinafter "SE"), an Indonesian private power project developer. We are pleased to announce that SEML has signed loan agreements with a syndicate of banks including Japan Bank for International Cooperation (hereinafter "JBIC") for the expansion of the Project on January 10, 2025.

In this expansion of the Project, a second unit (hereinafter “Unit 2”) will be built on a site adjacent to the existing unit (hereinafter “Unit 1”) which began commercial operation in December 2019, and the generating capacity of the Project will increase to approximately 170 MW – roughly double the current capacity – with estimated total project costs of 70 billion yen. A long-term power purchase agreement effective until 2052 has been signed with PT PLN, Indonesia's state-owned power company, and we aim to commence construction in March 2025 and commercial operation in 2027. Once the new unit goes into commercial operation, the Project combining Units 1 and 2 is expected to contribute to supplying electricity equivalent to the power usage of approximately 900,000 households in Sumatra Island, Indonesia. Further expansion of the Project up to 66 MW is also expected in the future.

Sumitomo Corporation, in consortium with Indonesian engineering companies PT Inti Karya Persada Tehnik and PT Wasa Mitra Engineering, has also been engaged in EPC (*1) of the entire plant. The main equipment such as geothermal steam turbine and generator will be supplied by Fuji Electric Co., Ltd.

This loan is provided as project finance by a syndicate of JBIC, the Asian Development Bank, Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd. and the Hyakugo Bank, Ltd. The loans from the private financial institutions are covered by Overseas United Loan Insurance provided by Nippon Export and Investment Insurance.

This expansion of the Project is being promoted with the support of the governments of Japan and Indonesia under the Asian Zero Emissions Community (AZEC) initiative.

The Geothermal Power Market in Indonesia

Geothermal power plant is an excellent renewable energy source that can stably generate electricity with high levels of capacity factor (*2) throughout the year and is not dependent on changing factors such as the presence of wind or sun, meaning that it can be positioned as baseload power source (*3).

Although Indonesia, which has some 130 active volcanoes, is the world's second largest geothermal country with approximately 28,000 MW of potential geothermal resources (*4), its rate of geothermal resource utilization stands at only about 10%. This is because geothermal power projects are difficult to develop due to the high costs in exploration stage as well as the risk of not being able to obtain sufficient amounts of steam and hot water as a result of exploration. The Indonesian government has set a goal of increasing the country’s geothermal power generation capacity from the current 2,400 MW to 5,800 MW by 2030, as stable renewable energy sources.

Sumitomo Corporation Group's Geothermal Power Business in Indonesia

Sumitomo Corporation began supplying equipment related to geothermal power plant in the 1970s and has a successful track record of delivering facilities and EPC business in 33 geothermal power projects worldwide with a total power generation capacity of 2,700 MW. In Indonesia, we were one of the first Japanese companies to start geothermal power business in 1995, and awarded our first EPC contract for a geothermal power plant in 1997. Since then, we have been involved in 12 geothermal power projects (total generation capacity of approximately 900 MW), which is approximately 40% of the total current geothermal power generation capacity in Indonesia. Also, we were involved in this Project in 2011 at the exploratory study phase as our first IPP (*5) project. Since the commencement of commercial operation in 2019, we have contributed to Indonesia’s electric power industry through stable operation.

Sumitomo Corporation will continuously develop new geothermal power projects by leveraging the experience gained through the Project to meet Indonesia's growing electricity demand and contribute to the country's economic development, while promoting the use of renewable energy to realize a carbon-neutral society.

(*1) Engineering–Procurement–Construction (lump-sum construction contracting business)
(*2) Ratio of the actual energy generated by a power plant over a specific period to the maximum possible energy that could have been generated if the plant operated at its full capacity continuously during that same period.
(*3) A power source that can generate electricity stably regardless of day or night, season or weather conditions.
(*4) Amount of geothermal energy that theoretically exists within a specific region. Source: Japan Organization for Metals and Energy Security
(*5) Independent Power Producer

Muara Laboh Geothermal Power Project

Project Name	Muara Laboh (Unit 1)	Muara Laboh (Unit 2)
Availability	In operation	Under development
Net power generation capacity	Approx. 85 MW	Approx. 83 MW
Start of operation	December 2019	2027 (scheduled)
Shareholder structure	Sumitomo Corporation 50%, INPEX 30%, SE 20%

Power plant location

Photograph of the power plant

Related Information

Inquiries: Corporate Communications Department, Sumitomo Corporation; News Release Contact Form