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- Mitsui & Co., Ltd.
Corporate Communications Division
Mitsui & Co., Ltd. ("Mitsui"), hereby announces that PT Paiton Energy ("PE"), which is an independent power producer in Indonesia, jointly owned by Mitsui (share 36%), IPM Eagle LLP (45%, a partnership consisting of International Power plc and Mitsui), The Tokyo Electric Power Company, Inc. (14%) and PT BHP (5%), has obtained exclusive negotiation rights to promote the Paiton 3 coal-fired power plant (the "Expansion Project") at the Paiton Power Generation Complex ("Paiton Complex") in East Java and executed a power purchase agreement ("PPA") for the Expansion Project with the Indonesian state-owned power company, PT PLN ("PLN"), on August 4, 2008.
Mitsui, as a major shareholder of PE since its foundation in 1994, has been continuously engaging in the operation and management of PE who achieved commercial operation of a 1,230 MW coal fired power unit in Paiton Complex in 1999. PE sells the electricity to PLN in accordance with an existing power purchase agreement which is valid until 2040. PE will build, own and operate the Expansion Project in Paiton Complex, an additional 815MW coal-fired power plant with highly efficient super-critical technology (Major equipment supplier: Mitsubishi Heavy Industries, Ltd.), and generate and supply electricity to PLN for 30 years (from the commercial operation date) in accordance with the PPA. Also, new power plant will be equipped with flue gas de-sulfurization unit, to meet with and conscious about environment requirement. The total project cost would be estimated approximately US$1,400 million. The Expansion Project will use the existing on site facilities such as the coal yard, the coal conveyer and the wastewater system, providing a reduction in capital costs and achieving efficient operation, thereby enabling PE to serve the development of Indonesia by supplying competitive electricity.
The Government of Indonesia and PLN have been seeking additional power generating facilities and the efficient use of domestic coal, and promoting the construction of coal-fired power plants using domestic coal to resolve power shortages and meet increasing power demand. The Paiton Complex, which has sufficient land and infrastructure for an additional power unit, was selected by the Government and PLN as the location for the Expansion Project which is classified as the one of most important IPP project in the country. PE and its other shareholders are targeting commercial operation in 2012 and have the strong support of all stakeholders, including the Government of Indonesia, PLN. PE and its shareholders, with advise from Bank of Tokyo Mitsubishi UFJ as financial advisor, are discussing project finance for the Expansion Project with Japan Bank for International Cooperation and we expect financial close in the first quarter of 2009.
Power and infrastructure projects is one of primary business focus for Mitsui, and developing its investment portfolio in such business field. Mitsui owns some 3,770MW of net generating capacity worldwide. With the global increase in power demand, Mitsui will further promote its global power business by developing new projects and achieving the stable operation and management of its portfolio.
This press release includes forward-looking statements about Mitsui. These forward-looking statements are based on the current assumptions and beliefs of Mitsui in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Mitsui's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. The risks, uncertainties and other factors referred to above include, but are not limited to, those contained in Mitsui's latest annual report on Form 20-F, which has been filed with the U.S. Securities and Exchange Commission.
This press release is published in order to publicly announce specific facts stated above, and does not constitute a solicitation of investments or any similar act inside or outside of Japan, regarding the shares, bonds or other securities issued by us.