LG상사 새소식
LGI propels its industrial infrastructure business
Date : 2015-08-21 | View : 15,580

LGI propels its industrial infrastructure business

  • - Following its entrance into coal-fired cogeneration business in China,
    the company is launching a private hydro power generation business in Indonesia
  • - A hydropower plant with a capacity of 41MW located in Northern Sumatra is scheduled for completion in 2018
  • - Secured ownership and operation rights over power plant facilities which
    ensures a stable profit by signing a 30-year power purchase agreement

Following the entrance into coal-fired cogeneration business in Gan Sushen, China, LGI is pushing ahead a private hydro power generation business in Indonesia in a bid to penetrate industrial infrastructure businesses.

On August 20, LGI formally announced that the company, together with Indonesia’s energy specialist, the Titan Group, will push ahead with the construction of the Hasang Hydropower Plant in Indonesia.

The Hasang Hydropower Plant will be constructed as a run-off river type, which uses the head drop at the tunnel’s exit to generate power. The plant will have a power generation capacity of 41MW. This power plant, which will be constructed on a 700,000 square meters sprawling site in Toba, North Sumatra, in Indonesia, will begin construction at the end of this year, and will be completed in the second half of 2018.

This project will be carried out with private capital under the BOO (Build-Own-Operate) method, by which private companies construct the plant, hold ownership over the plant, operate the plant, and collect their returns on investment costs. As such, this project is also called an independent power producer (IPP) project, and LGI will have ownership and operation rights over the facilities.

Last year, LGI secured the largest stake of 51% in this venture after signing a shareholders' agreement with the Titan Group. The company has since led the entire business development procedure, from local permissions and approvals to compensation for land, and from the power purchase agreement and financing to the commencement of construction and operation of the power plant. On August 19, LGI signed a 30-year power purchase agreement (PPA) with Indonesia’s state power company, PLN.

The Hasang Hydropower Plant is part of the Indonesian government’s ‘Fast Track Ⅱ’ Program, which is designed to deal with the country's power shortage problem. Thus, the Indonesian government guarantees the payment of power transaction prices.

Meanwhile, LGI has recently pushed its industrial infrastructure businesses dealing with logistics, power generation, and other resource businesses. Under this policy, LGI is seeking to adjust to the changing business environment that is associated with the steady fall in prices of raw materials, and to foster the industrial infrastructure business, together with its existing resources and trading businesses, as the company’s new growth engine. Based on experience in power generation businesses in China and Indonesia, LGI will explore other business opportunities for industrial infrastructure development in Myanmar, Oman, and other emerging markets with significant growth potential.

▲ Map of the Hasang Hydropower Plant Location in Indonesia

▲ Aerial view of Hasang Hydropower Plant