Chinese firm expands waste to energy footprint with Indonesia acquisition

Concession to construct, own and operate a facility in Palembang

PT Jinjiang Environment Indonesia, a wholly owned subsidiary of China's leading waste-to-energy (WTE) operator China Jinjiang Environment Holding Company, has acquired a 95% stake in PT Indo Green Power (IGP), which has secured a concession to construct, own and operate a WTE facility in Palembang, Indonesia, with a total installed waste treatment capacity of 1,000 tonnes per day.

Under the concession terms, announced on 1 June 2018, IGP has an exclusive right to provide waste treatment services in a defined area in Palembang for a period of 30 years from the date of the commencement of commercial operation of the project. This is in consideration of a tipping fee and electricity tariff payable by the relevant local authorities for the waste treatment services provided and electricity generated by the Palembang project, respectively.

The estimated total investment for the project amounts to US$120 million, funded via China Jinjiang Environment's internal resources, bank borrowings and/or future equity or debt fund raising. IGP will have an issued capital of 25 billion rupiah (US$1.80 million) and Jinjiang Environment Indonesia's contribution will be 123.75 billion rupiah, pro rata to its 95% stake.

With Palembang being the largest port and trade centre in South Sumatra, and the ninth most populous city in Indonesia, the market potential for waste treatment is significant.

China Jinjiang Environment non-executive, non-independent chairman Wang Yuanlou describes the IGP acquisition as another step in the company's overseas expansion and will help to strengthen its footprint in the Southeast Asia WTE market. With its target set on overseas waste treatment markets with strong potential, it has been riding on the One Belt One Road initiative and has explored markets such as India, Germany, Brazil and Indonesia.

In doing so, the company has applied its mature and advanced technologies as well as its operating models in countries and regions with similar waste composition as China, setting standards for the group through creating a series of overseas benchmark projects.

In 2017, China Jinjiang Environment secured three projects in India, making it a watershed year for the group's overseas expansion. Earlier this year, the group laid the foundation for exploring the European market with its incorporation of Waste Tec in Germany to promote advanced waste pre-treatment technology process in Europe, which involves the organic combination of its own technology. In April, the group agreed to buy a 51% stake in Brazil's first WTE project, extending its reach to South America.

Established in 1998, China Jinjiang Environment is the first private WTE operator in China with the largest waste treatment capacity in operation. It operates 20 WTE facilities in 12 provinces, autonomous regions and centrally administered municipalities in China and has an additional three WTE facilities under construction and 21 WTE facilities at the preparatory stage. The facilities in operation have a total installed waste treatment capacity of 28,280 tonnes per day.

Date

4 Jun 2018

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