Japanese coal power plant project stalled in Indonesia

A $4 billion Japanese project to build a large coal power plant in Indonesia has hit a snag due to opposition from local residents, sources close to the matter said Friday.

About 50 landowners have refused to sell land totaling around 40 hectares that would account for about 20 percent of the site for the 2 million-kilowatt plant to supply electricity to 13 million people in Central Java State, they said.

Unless purchase of the land is completed by Oct. 6, PT Bhimasena Power Indonesia, an Indonesian company established for the project with Japanese investment, will lose its right to construct the power plant and a new round of bidding will be conducted.

Completing purchase of the land before Oct. 6 will be very difficult, said an official of the Japanese government, which has fully backed the project as an example of infrastructure exports, cited as a pillar of Japan's growth strategy.

An aide to Indonesian President Susilo Bambang Yudhoyono also said completing the land purchase is almost impossible.

Bhimasena Power, which is partly owned by Japanese trading house Itochu Corp. and Japanese power generator Electric Power Development Co., said it will make utmost efforts to complete the purchase of the land.

The launch of construction has been delayed for one year due to the local opposition.

The Japanese government plans to urge the Yudhoyono administration to issue a presidential decree to delay the deadline again. The Indonesian government has also supported the project as electricity demand has been growing fast amid rapid economic growth.

The landowners opposed to the project include residents concerned about the environmental impact, a group of Islamic clerics and people seeking to raise the purchase price for the land.