Dian Swastika Sentosa, a coal miner unit of Sinar Mas Group, raises its capital expenditure by a half next year for expansion in the coal-fired power plants as the company seek to increase revenue. (Reuters Photo/Romeo Ranoco)

Sinar Mas's Coal Unit Set for $150m Power Expansion Next Year

BY :FARID FIRDAUS

DECEMBER 14, 2016

Jakarta. Dian Swastatika Sentosa, a coal miner unit of Sinar Mas Group, will raise its capital expenditure by a half next year for expansion in coal-fired power plants as the company seek to increase revenue.

The company would spend $150 million in 2017 capex from an estimated $100 million this year, said Hermawan Tarjono, a director at Dian Swastatika.

Hermawan also said that the company is open to acquiring power plants, especially those situated near the company's mines in Central Kalimantan, South Kalimantan, Jambi and South Sumatra.

But it has yet to earmark any funds for the acquisition, Hermawan said.

Dian Swastatika is now constructing a 100 megawatts power plant in Kendari in South Sulawesi, which cost $200 million. For the project the company take up $150 loan from China Development Bank and use internal cash to plug the remaining costs.

Meanwhile, the company would start construction $337 million power plant, that would have a capacity of 200 megawatt in Gunung Mas in Central Kalimantan.

Dian Swastatika also expect its 300 megawatt power plant in Musi Banyuasin in South Sumatra to be online next year, Hermawan said.

The last power plant would help the company to book $750 million in revenue next year, up 25 percent from an estimated $600 million this year, he said.

"Also, the increase in revenue would be supported by increase in coal sales as the commodity price improves," Hermawan said.

About 70 percent of the company revenues today from coal, but Hermawan said that Dian Swastatika targets the power plant business would turn more revenue in the next five years.

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