A South Korean power producer is looking to finance a hydropower plant project in Central Java that would be the coal buyer’s first renewable energy deal with Indonesia.

Korea Southern Power (KOSPO) is currently reviewing a feasibility study to develop the 230-megawatt (MW) Maung hydropower plant in Banjarnegara, Central Java, with Indonesian state-owned construction firm Nindya Karya and power producer Indonesia Power, a subsidiary of state utility company PLN. They estimated the hydropower plant development to cost US$650 million.

“If every condition is reasonable, KOSPO will be an equity investor. We will have a joint operation with Indonesia Power,” said KOSPO overseas business senior manager Chong Ryu after signing a memorandum of understanding (MoU) with the Indonesian companies in Jakarta on Friday.

South Korea is among the many major economies — including China and the United States — being eyed by President Joko “Jokowi” Widodo to finance his government’s main energy ambition of stamping Indonesia’s oil imports, which has put pressure on the rupiah exchange rate.

Earlier this month, Indonesia secured $6.8 billion from the United Arab Emirates (UAE) to develop, among other projects, two oil refineries and one floating solar power plant. The oil refineries belong to state-owned oil company Pertamina and the plant by PLN.

Indonesian Coordinating Investment Board (BKPM) head Bahlil Lahadalia, who witnessed Friday’s signing ceremony, said he expected the hydropower plant to be “up and running within a maximum of four years”, or by 2024.

“I will guard the project and ensure that nothing disrupts its development,” he added.

Jokowi granted the BKPM extra powers to optimize investment flows in Indonesia late last year. He issued Presidential Instruction (Inpres) No. 7/2019 on the acceleration of ease of doing business (EODB) that streamlines business licensing processes with the board.

KOSPO, a subsidiary of South Korean state-owned utility company Korea Electric Power Corporation (KEPCO), hoped to speed up the project’s development as an initial feasibility study had already been completed.

“We already have a feasibility study but we have to review it because the project was halted several years ago,” said Nindya Karya president director Haedar A. Karim, adding that the company needed at least two years to construct the plant.

The investment would be a change of pace for KOSPO, which is a frequent buyer of Indonesian coal.

Indonesia Power acting president director Ahsin Sidqi said the hydropower project, which was “a direct mandate from PLN”, was also one of the utility company’s investments in achieving a 23 percent renewable power production mix by 2025.

PLN, which is Indonesia’s largest power producer, frequently reiterates its commitment to meeting the elusive 23 percent mark yet Southeast Asia’s largest economy continues to miss annual renewable energy development benchmarks.

The country closed 2019 with a power production capacity of 69.1 gigawatts (GW), lower than the targeted 74.8 GW set in the General National Energy Planning (RUEN) roadmap.

The BKPM said in a statement that KOSPO’s investment followed up Bahlil’s visit to Seoul last month. The businessman-turned-government official had met with major South Korean multinationals such as LG International, Hyundai Motors, Lotte Group and Hankook Tire and Technology.

According to the latest BKPM data, South Korea was Indonesia’s eighth-largest foreign investor in the January to September period last year. The East Asian country funneled $638.6 million into 2,100 projects over that period.

The statement added that the Maung plant was expected to reduce sedimentation in the Mrica Reservoir in Banjarnegara. Such sedimentation has been curtailing power generation from the 180 MW Mrica hydropower plant since at least 2008. The statement suggests that the Maung plant would be built along Mrica’s power source, the Serayu River.