Japan's export bank agrees $3.4-billion loan for Indonesian coal station

JAKARTA (Reuters) - The Japan Bank for International Cooperation (JBIC) agreed on a $3.4 billion loan for the controversial Batang coal power project, after years of delay, the publicly funded Japanese bank said.

JBIC will contribute just over $2 billion to the loan to fund the 2,000 megawatt coal-fired power plant in Central Java. Other Japanese banks including Sumitomo Mitsui, Mizuho and Bank of Tokyo-Mitsubishi are also joning the loan, JBIC said in a release late on Friday.

Financial close of the loan for the coal-powered station was delayed two months, just one of many hitches for the project.

Indonesia’s Supreme Court had earlier thrown out a landholders’ lawsuit on technical grounds, paving the way for the government to take over the remaining land for the project.

Construction was meant to begin in 2012, but has been repeatedly delayed as dozens of landowners refused to give up their paddy fields for the power plant.

PT Bhimasena Power Indonesia (BPI) - a joint venture set up by Indonesian coal miner PT Adaro Energy Tbk and Japan’s Itochu Corp and Electric Power Development Co (J-Power) - is building and operating the project.

Japan is one of the few industrialized economies that still promotes coal heavily, including technology to reduces carbon emissions from the world’s dirtiest fossil fuel. Critics say the reductions are too small to justify the expense, especially as renewable energy sources become cheaper.

(Corrects to remove reference to mine in headline)

Reporting by Aaron Sheldrick; Editing by Richard Pullin