Biomass power generation

Indonesian government is planning to raise electricity tariffs from biomass power plants. In addition, the price of renewable energy power will no longer be negotiable, such that Perusahaan Listrik Negara (PLN) would be required to purchase electricity according to the tariff set by the Indonesian government, with subsidies to cover the difference in price. We expect such increase in tariff and regulatory change will result in a higher purchase price of electricity by PLN. Also, in the sight of growing economics in Indonesia and Indonesian Government’s determination in tackling the problem of energy consumption, we have acquired a palm kernel mill to provide us an opportunity to invest and develop a new business segments in palm kernel oil production and excess biomass power supply in Indonesia.

The palm kernel oil mill locates in Jambi City, Indonesia and it produces palm kernel expeller at a capacity of 33,750 tons per year and palm kernel oil at a capacity of 41,250 tons. The mill crushes palm kernel to render palm kernel oil for sale and the palm kernel expeller for use as additional fuel for the ancillary power plant. The ancillary power plant comprises two power units to support the operation of the mill. One power unit having a power output capacity of 15 Megawatt is in operation and supplies power to the mill for up to around 2 Megawatt. The excess power generated is sold to PLN via PLN’s power supply network.

As the largest economy in Southeast Asia, Indonesia falls short of power supply. To this end, the Indonesian government has launched the Indonesia Terang / Bright Indonesia Programme, with a view to increase national generating capacity and power coverage rate. ELL believes that there is huge potential in Indonesia’s biomass power generation market and, therefore, commit to investing in this market in an attempt to improve the Group’s biomass power generation facilities and their capacities. The biomass power generation business is not only an expected growth area for the Group, but also a starting point for the Group to launch environmental protection business in Indonesia and/or other regions in Southeast Asia.