JAKARTA - A $4 billion Japanese project to build a large coal-fired power station in Indonesia has hit a major snag due to opposition from local residents, sources revealed.
Around 50 landowners are refusing to sell 40 hectares in total that would account for 20 percent of the planned construction site in Central Java province, the sources said Friday.
Unless the land purchase is completed by Oct. 6, PT Bhimasena Power Indonesia, a local company established for the project with Japanese investment, will lose its right to build the power plant and a new round of bidding will have to be conducted.
Bhimasena Power, which is partly owned by trading house Itochu Corp. and Tokyo-based power generator Electric Power Development Co., said it will make utmost efforts to purchase the land.
But completing the acquisition before the October deadline will be extremely difficult, a government official conceded in Tokyo.
An aide to Indonesian President Susilo Bambang Yudhoyono struck an even more pessimistic note, saying that buying all of the land in time will be virtually impossible.
Prime Minister Shinzo Abe’s administration has fully backed the project as an example of Japanese infrastructure exports, which have been cited as a pillar of its growth strategy.
The Indonesian government is lending its support because electricity demand has surged amid rapid economic growth. With a projected capacity of 2 million kw, the power station would supply power to some 13 million people in Central Java.
The launch of construction already has been delayed for a year due to the local opposition, and Abe’s government plans to urge Yudhoyono to issue a presidential decree to push back the deadline again.
The landowners opposed to the project include residents concerned about the potential environmental impact of the plant, a group of Islamic clerics and people seeking to raise the land’s purchase price.