September 28, 2015 / 2:56 AM / 4 years ago

Indonesia to miss funding deadline for $4 bln power plant

JAKARTA, Sept 28 (Reuters) - Next week’s deadline to provide initial funding for a $4 billion power plant in Indonesia will likely be pushed back again as the government tries to resolve long-running land disputes, company officials said.

Japan’s Electric Power Development Co Ltd (J-Power) and other investors have until Oct. 6 to decide whether to build the 2,000-megawatt coal-fired power plant in Central Java. It would be the biggest generator of its kind in Southeast Asia.

“The process of land acquisition is still ongoing,” said Murtaqi Syamsuddin, director of investment planning at Indonesian state-owned power firm Perusahaan Listrik Negara (PLN), which will be the main buyer of the electricity.

“It seems we will need more time since the Oct. 6 financial close can’t be met.”

Construction was meant to begin in 2012 but has been repeatedly delayed as dozens of landowners refuse to give up their paddy fields for the power plant.

Getting the project off the ground has been a top priority for President Joko Widodo, who last month used a ground-breaking ceremony for the plant as proof that the government was starting to meet its promises to kick-start badly needed infrastructure projects.

However, no ground was actually broken at the event due to the land disputes. Widodo told attendees he expected the problems to be sorted out within a month.

Despite the uncertainty, investors said they remained committed to the plant.

J-Power is part of a consortium that won the Batang power plant project in 2011. Other shareholders include Itochu Corp and a unit of Indonesian coal miner Adaro Energy Tbk .

Reporting by Wilda Asmarini in JAKARTA and Osamu Tsukimori in TOKYO; Writing by Randy Fabi; Editing by Stephen Coates

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