Korea Southern Power (KOSPO), a South Korean energy producer has drawn its attention to Central Java intending to develop major hydropower stations. Additionally, the project marks the first deal between South Korean and Indonesia in renewable energy.
KOSPO is currently undertaking a study to improve Maung hydropower station estimated to produce 230-megawatt in Banjarnegara. Consequently, the contract incorporates Nindya Karya, an Indonesian government-owned construction-company and, PLN, a state utility firm. According to the study, the budget in the development of Maung hydropower estimates $650 million. Therefore, the contract serves to improve both the South Korean government and the Indonesian government due to improved economy and infrastructure respectively.
According to Chong Ryu, KOSPO’s senior manager, the merger between the two countries will result in KOSPO developing into an equity investor hence able to sell its shares to numerous people or organizations. Chong later remarked that if each condition is favorable then KOSPO will become an equity investor through mutual operations with Indonesia energy. The manager sealed the deal through signing an MoU with the Indonesian power firms in Jakarta.
South Korea, the United States, and China are among the major economies in the world. Therefore, a merger with any of the improved economies results in improved infrastructure, economy, and currency. The motive to develop Indonesian’s economy has necessitated President Joko Widodo to engage in deals with the South Korean government. Resultantly, the merger will finance the Indonesian energy goal through reduced oil imports that have lowered the rupiah currency exchange rate.
In January 2020, the United Arab Emirates (UAE) granted $ 6.8 billion for infrastructure development that included two state-owned oil firms and a solar plant under PLN. The development of power stations is aimed at lowering the cost of oil import and focusing on renewable sources of energy ultimately minimizing power depletion and environmental pollution. Moreover, Bahlil Lahadalia, head of the Indonesian Coordinating Investment Board stated that the hydropower plant is expected to function within four years. He further stated that he will protect the project and ensure nothing hinders its development.
The Indonesian energy sector was mandated to attain a 23% renewable energy production mix by the year 2025. Ahsin Sidgi notes that the hydropower development, a direct responsibility from PLN will stimulate the achievement of the goal. Although PLN continues to state its obligation in achieving the 23% mark, the Southeast Asia economy reluctantly misses the annual energy growth benchmarks.
The latest BKPM data reveals that South Korea was the eighth biggest overseas investor in Indonesian in the year January-September. Additionally, the data exposed that Maung station experienced reduced sedimentation hence limiting power generation. The reports from BKPM also revealed that the investment in KOPOS Company has attracted several investors that include Hyundai Motors, LG International, Hankook Tire and technology, and Lotte Group initiated by Bahlil’s official visit to Seoul.
South Korean will, therefore, benefit from the project due to the joint operation that will allow the country to invest and later be part of the profit experienced in the country. The South Korean government has embraced the project and sealed the deal with a Memorandum of Understanding with the Indonesian government.