Out-Law / Your Daily Need-To-Know

Jera sells stake in Indonesia's coal fired plants operator

Out-Law News | 26 Aug 2021 | 12:26 am |

Japan’s power generator Jera has sold its 14% stake in Indonesia’s PT Paiton Energy, which operates coal power plants, to a unit of energy company PT Medco Daya Abadi Lestari for an undisclosed sum.

Current shareholders of Paiton Energy include Mitsui, Nebras Power, Medco Energi Sentosa and Batu Hitam Perkasa, a subsidiary of Toba Bara Sejahtra.

Paiton Energy owns and operates coal-fired power plants in Indonesia under a long-term power purchase agreement with Indonesia’s state-owned electricity company PT Perusahaan Listrik Negara (PLN).

In June Mitsui decided to sell its 45.5% stake in the coal-fired plant to Singapore-based RH International (RHIS), a subsidiary of Thai power producer Ratch, for an undisclosed sum. The transaction is expected to complete by the end of March 2022.

John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “The exit from coal fired power plants by Japanese and international investors will continue apace given the conflict in holding carbon intensive generation whilst seeking to achieve carbon neutrality. The extent to which asset value has to be recalibrated will be an important consideration when exiting coal. National or regional policies to assist in energy transition will therefore likely play increasingly vital roles if countries that have traditionally relied on coal fired power generation are to deliver on their net zero commitments.”

Jera is a joint venture between Tokyo Electric Power Company Holdings Inc and Chubu Electric Power Co Inc, aiming to achieve net zero emissions by 2050.