October 2019 – Japanese companies are potentially wasting their investment in the Cirebon 2 coal-fired power project in Indonesia. Marubeni and JERA (a joint venture between Tokyo Electric Power Co., Inc. and Chubu Electric Power Co., Inc.) are investing in the sponsor of this project, PT. Cirebon Energi Prasarana (CEPR). Commercial banks, Mizuho Bank, Mitsubishi UFJ Bank (MUFG Bank), Sumitomo Mitsui Banking Corporation (SMBC), and Japan Bank for International Cooperation (JBIC), a public bank, are the financiers.
Wasted Electricity means wasted investment
In addition to bribery and corruption related to the project, there is a question about whether this project is really necessary in the first place. As an emerging economy, Indonesia claims that it needs more power supplies for further economic growth. However, the Java-Bali grid, where this project is located, already has some of the highest rates of electrification in the country (99.99%). Moreover, around 40% of the electricity produced was not being used, according to statements by the state-owned electricity company, PLN’s CEO in November 2017. In other words, this project would contribute to the oversupply of electricity without assisting the average Indonesian to obtain power.
In recent years, social license to operate has become an increasingly important precondition for infrastructure and mining development, and Cirebon 2 does not have the social license to operate. This project is not welcomed by the local community who has been suffering from water and air pollution caused by Cirebon 1 power plant currently in operation. They do not want an additional unit.
Increasing Environmental Awareness among the Public
The environmental awareness of the people directly affected by this kind of projects as well as the urban dwellers, such as Jakarta, are rapidly increasing. The public are raising voice through the demonstration in the main streets in Jakarta and the social media after Jakarta’s air quality ranked the worst in the world recently. In July 2019, a civil lawsuit was filed to sue the President, Jakarta Governor and other officials over their inactions for the air pollution.
We will need to alter our perception that cheaper coal power is the only viable option for developing countries. This project concerns each and every resident in Japan also: we are indirectly supporting this unnecessary power plant project by providing funds to the three commercial banks as well as through our tax payments to our government. Can we, as bank account holders, as well as bearers of public debt, be a part of such a wasted investment?