Asia coal power development now and beyond

The growth in the use of private finance to fund major public infrastructure projects throughout Asia continues unabated. Yet the Asian power sector faces the hurdle of trying to balance industrial and consumer demand with a sound environmental sustainability strategy.

This is particularly so for Asian countries 'blessed' with large reserves of coal (e.g. Indonesia, Vietnam and Mongolia) which have a vested interest in promoting this fuel source in their energy mix despite legitimate environmental concerns. They have each in varying degrees embarked on aggressive infrastructure development programmes to 'fuel' industrial growth, utilising these resources at their door step.

Vietnam has had success with the development of the Mong Dong Power Plant, with many more plants under development. There is a proliferation of coal-fired plants in Indonesia (including the recently closed Central Java coal-fired plant), which rely on the rich coal seams of Kalimantan.

Mongolia, despite its remoteness and challenging climate, is a recent entrant into the ring and is attracting huge international interest given its untapped natural resources. The State Property Committee (SPC), the government agency overseeing the use of the country's land and resources, is making the country more attractive to market
participants, notably by establishing a dedicated PPP Unit and creating a legal and regulatory framework which facilitates investment.

SPC recently embarked on a large state-of-the-art combined heat and coal-fired power plant (CHP) to replace an aging Soviet era plant and provide essential energy and heat to the capital of Ulaanbaatar.

If international and domestic interest is anything to go by, this is just the beginning of a successful chapter in the country's development. There is said to be over a 100 billion tonnes of untapped Mongolian coal so the opportunities are potentially boundless; the question is how they will deliver these projects whilst ensuring the environment does not take the hit?

Martin David, Asia Head of Finance & Projects, DLA Piper

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Tags: Martin David, DLA Piper