The power plant will comprise two units of 200MW each and will be located in Kalimantan, in the island of Borneo.

The MoU will primarily cover the supply and export of power from the proposed power project to the Malaysian state of Sabah, among other aspects.

Malaysian national electric utility TNB owns a stake of 83% in Sabah Electricity Sdn Bhd (SESB) which is responsible for power generation, transmission, and distribution services in the state. The remainder stake of 17% in SESB is held by the Sabah state government.

As per the terms of MoU, which is valid for a 2-year period, TNB and PLN will begin exploring and assessing the suitable business models, related risks and financing options associated with the new power project.

For TNB, the project aligns with its international expansion to gain new overseas generation capacity and its efforts to handle the increasing demand for power in Sabah.

TNB, in a statement, said: “The signing of the MoU is expected to be a win-win venture for both countries through the enhancement of bilateral cooperation and improvement in power supply stability for Sabah and Kalimantan.”

As per a report in Nikkei Asian Review, the new project in Indonesia follows TNB’s initiation of a 10-year program to develop a portfolio of non-Malaysian assets that would make up 20% of its revenue by 2025.

Neither TNB nor PLN have revealed the financial figures needed to establish the proposed power plant.

The coal-fired power project, which will see co-operation between Indonesia and Malaysia, was first suggested by Malaysian Prime Minister Datuk Seri Najib Tun Razak and Indonesian President Joko Widodo on the sidelines of the Indian Ocean Rim Association (IORA) summit held in Jakarta in March.