China, Indonesia set up $18bn hydro plan to power Borneo

Indonesian energy company Kayan Hydro Energy (KHE) has signed a memorandum of understanding with the Power Construction Corporation of China to develop a 900MW hydropower plant on the Kayan River in the rainforests of Borneo.

This development is expected to be completed within four years. Subsequent phases may add five further dams over the next 20 years to create between 9GW and 11GW of installed capacity at an investment cost of almost $18bn, with most of the necessary capital to be supplied by China.

Abdul Aziz, site manager for the scheme, told local media in North Kalimantan that the total land required to develop the first phase of the project would reach 115ha, and 150ha for the second.

The pace of development will be dictated by the growth of demand in North Kalimantan, the Indonesian portion of Borneo. The federal government is trying to develop the region, which is subject to frequent electricity shortages.

The agreement, signed in Beijing on 13 April, has been 10 years in the making. After the signing, PowerChina’s Sinohydro subsidiary said: "PowerChina began studying the hydropower resources of the Kayan River in 2008 and completed the development plan for the whole basin of the river as well as the feasibility study and preliminary design of the first hydropower plant in 2013."

Both parties have agreed to set up a joint venture to build the project.

Similar grand plans have been outlined in the past. In 2014, KHE signed 12 memorandums with Chinese energy firms, led by Shanghai Electric Power, during a visit by Indonesian president Joko Widodo to that year’s Asia Pacific Economic Cooperation Summit.

Since entering the Indonesian market in 1995, PowerChina has developed infrastructure projects totalling around $2.4bn.
Indonesia’s demand for energy is expected to rise by about 10% a year.

Image: The Kayan River in the Borneo rainforest is a popular adventure holiday destination (Mundooz)

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