OREANDA-NEWS. June 20, 2011. ITOCHU Corporation (headquartered in Minato-ku, Tokyo; Masahiro Okafuji, President & CEO; hereinafter ITOCHU) and Electric Power Development Co., Ltd. (headquartered in Chuo-ku, Tokyo; Masayoshi Kitamura, President; hereinafter J-Power) announced today that they have acquired a letter of intent for the Development of Central Java Coal Fired Power Plant 2 x 1000MW independent power producer (IPP) project that was put out to international tender in April 2011 in Indonesia, in collaboration with an Indonesian leading coal company, PT Adaro Energy Tbk. (hereinafter Adaro).

This project is one of Asia's largest IPP projects. It includes construction of a coal-fired power plant with a total capacity of 2,000 MW in the province of Central Java and a 25-year power purchase agreement (PPA) with IndonesiaЃfs state-own electricity company PT Perusahaan Listrik Negara (PLN).

The project is characterized in using locally produced sub bituminous coal as fuel for power generation and in introducing to Indonesia the first two large boilers with a capacity of 1,000MWeach, using the ultra super critical (USC) technology to minimize the environmental impact. The project is also in line with the initiative of the Japanese government for Deployment of Integrated Infrastructure Systems Overseas.

Indonesia faces an urgent to boost its power generation capacity to meet power demand that is rising steadily in association with rapid economic growth. The consortium of ITOCHU, J-Power, and Adaro was granted the letter of intent, evaluated for its technology to minimize the environmental impact, a proven track record in the operation of high efficiency coal-fired power plants, and ample experience in Indonesia.

In the future, the consortium will sign the PPA, followed by procedures for an engineering, procurement, and construction (EPC) contract, a license granted from the Indonesian government, and a loan agreement with the syndicate. The commercial operation is expected to start in February 2017.

J-Power has been actively engaged in the overseas power generation business while owning and operating coal-fired power plants with a total capacity of approximatel@8,400MWin Japan. Based on its accumulated technology for high efficiency coal-fired power generation, this project is expected to contribute to reliable power supply in Indonesia, to a reduction in the environmental impact, and to the transfer and promotion of advanced technologies through comprehensive support for the construction, operation, and maintenance of IndonesiaЃfs largest and most cutting-edge coal-fired power plant. It will also serve as a model of high efficiency coal-fired power generation operations in Asia.

ITOCHU has defined the IPP business as a priority area in its medium-term management plan Brand-New Deal 2012, given its potential to generate sustained earnings over the long term. In addition to North America, where it has consistently accumulated prime assets, ITOCHU will be working actively to add prime IPP assets in Indonesia, where the letter of intent was won, as well as in the rest of Asia, Europe, the Middle East, and other regions. In parallel with that, ITOCHU will be moving forward with power generation projects using more environmentally friendly technologies including wind, biomass, and geothermal power generation as well as the high efficiency coal-fired technology used, for instance, in this Indonesian project.