We, The Chugoku Electric Power Co., Inc. (“Chugoku Electric”), are pleased to announce that we and PT. Kencana Energi Lestari (“KEL”)* have signed a share purchase agreement on 31st January 2019 in relation to the 25% shares acquisition from KEL in a hydroelectric power generation project which is in commercial operation, located in North Sumatra Province of the Republic of Indonesia. The transaction will be made through our newly wholly owned subsidiary in Singapore**. This is our first participation in the hydroelectric power generation business in overseas and power generation business in Indonesia.
The hydroelectric power generation project (Pakkat hydropower plant) is owned by PT. Energy Sakti Sentosa (“ESS”) and has stable revenue source through a long-term Power Purchase Agreement with Indonesian state-owned electric power company, PT. Perusahaan Listrik Negara (PERSERO) (“PLN”). In addition, we and KEL have signed an advisory agreement together with the share purchase agreement and we are considering pursuing KEL’s new hydroelectric power generation projects.
As the domestic electric power business environment is becoming increasingly competitive, we have positioned our overseas business as one of our company’s growth areas. By utilizing the knowledge and experience of the electric power business that we have accumulated so far, we will continue to participate in new overseas projects and work to improve our profitability.
* The company develops hydroelectric power generation projects in Indonesia. It was incorporated in Indonesia in 2008.
** Chugoku Electric Power Singapore Pte. Ltd., a wholly owned subsidiary of Chugoku Electric.