BANDUNG, May 29 (EngineeringDaily) -- Astra International, an Indonesian corporation primarily known for its export and import trade business, is looking to expand its influence into other areas of business. The group is currently bidding for two power plant projects in Sumatra, costing a combined total of USD 1.17 billion, with the plan to strengthen its position in the infrastructure sector. Already holding Indonesia’s largest market value, acquiring the plants would allow Astra International to be known as a truly diversified conglomerate.
Pamapersada Nusantara, part of the Astra subsidiary United Tractors, is currently negotiating for control of two nine-month power plant projects in Sumatra, each with the capacity to produce 2-by-300 megawatts (MW) and 2-by-150 MW of electricity, respectively. The first project is estimated to cost between USD 720 to 780 million, while the other may cost up to USD 390 million.
Sara K. Loebis, corporate secretary for United Tractors, the nation’s largest heavy-equipment provider, said negotiations were still ongoing as of press time. They will announce one of the power plant projects in June 2014, revealing the company that came out on top.
Pamapersada Nusantara aims to take a 30 percent stake in the Sumatra power plant projects, while the remainder would be shared between three other undisclosed companies, including a mine owner, a mining contractor and an engineering procurement, and a construction (EPC) contractor.
The call for more power plants comes as a result of Indonesia’s need to boost its electricity supply to meet growing demand. The country needs to add an average 5,700 MW per year through the year 2022 to avoid an electricity crisis. The Energy and Mineral Resources Ministry’s Directorate General for Electricity reported that the nation’s electrification rate, that is the percentage of the population with access to electricity, stood at only 80.4 percent at the end of 2013.
In addition to its movements in the power sector, Astra International also aims to strengthen its position in the infrastructure field. The National Development Planning Board (Bappenas) has estimated that Indonesia needs to secure USD 550 billion worth of investment in infrastructure projects between 2015 and 2019 to resolve infrastructure bottlenecks that are impeding economic activities in Southeast Asia’s largest economy.
To help achieve that goal, Astra International is allocating Rp 2.5 trillion (USD 217.5 million) for capital expenditure of its infrastructure wings this year, primarily for toll roads, energy, clean water, ports, logistics, and telecommunications.
For instance, the company expects its 40 kilometer Kertosono-Mojokerto toll road in East Java, costing Rp 1.8 trillion, to be open by the end of this year. Marga Harjaya Infrastruktur, a subsidiary of Astra International’s subsidiary Astratel Nusantara, is working on this particular project.
The first section of the toll road will stretch 15 km from Kertosono to Jombang, while the second and third sections will be 20 km and 5 km in length, respectively. Construction on the first section is almost finished, while the second and third sections will be completed by November at the earliest. According to estimates, up to 23,000 vehicles per day are expected to use the toll road. Astra International director Paulus Bambang Widjanarko Eddy said his goal was to have this section completed and operating by August.
Astra International also plans to widen another toll roads it owns, namely the Tangerang-Merak toll road in Greater Jakarta, by adding two or three more lanes at an estimated cost of Rp 500 billion, and the company also owns a 40 percent stake in the 11.2 km Kunciran-Serpong toll road in Greater Jakarta.
As the company moves to further expand its influence, Astra International’s plans for its current and future holdings provide something to look out for in the future.
By Ismail Al Anshori
