Project Finance for Re-expansion of Tanjung Jati B Coal-Fired Power Plant in Indonesia
Supporting Japanese companies' participation in IPP project for ultra-supercritical power plant
- Area: Asia
- [Project Finance]
- Overseas Investment Loans
The Japan Bank for International Cooperation (JBIC; Governor: Akira Kondoh) signed on February 24 a loan agreement for project finance,*1
with Indonesian company PT. Bhumi Jati Power (BJP), in which SUMITOMO CORPORATION and The Kansai Electric Power Company, Incorporated and others have stakes, amounting up to approximately USD1,678 million (JBIC portion) for the re-expansion of the Tanjung Jati B coal-fired power plant in the country. This is part of a cofinancing deal participated in by Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Trust Bank, Limited, Mitsubishi UFJ Trust and Banking Corporation, The Norinchukin Bank and Singapore's Oversea-Chinese Banking Corporation Limited, with a total cofinancing amount of approximately USD3,355 million. Nippon Export and Investment Insurance (NEXI) provides insurance for the part of this loan provided by private-sector financial institutions.
In this project, BJP will build, own and operate an ultra-supercritical power plant with an installed capacity of 2,000 MW (two units of 1,000 MW each). The power from this plant will be sold to PT PLN (Persero), a state-owned power utility in Indonesia, for 25 years.
This loan supports an overseas infrastructure project in which Japanese businesses will participate as investors and become involved in its operation and management for a long time by taking advantage of the country's advanced technology. It will contribute to maintaining and strengthening the international competitiveness of Japanese industries. The loan is also in line with the Japanese government's strategy of promoting Japanese involvement in projects that include the design, construction, operation and management of infrastructure. Additionally, the loan is for an IPP*2
project for an ultra-supercritical power plant that introduces efficient and environmentally friendly technology to Indonesia.
In order to respond to the country's surging electricity demand, which has increased in line with steady economic growth, the Indonesian government has committed to promoting its 35,000MW power plants construction program for five years, from 2015 to 2019, and this project is positioned as a part of that program. By generating a steady power supply, this loan is also expected to support Indonesia's economic development as well.
- As Japan's policy-based financial institution, JBIC will continue to financially support the expansion of the overseas infrastructure business of Japanese companies by drawing on its various financial facilities and schemes for structuring projects, and performing its risk-assuming function.
- *1 Project finance is a financing scheme in which repayments for a loan are made solely from the cash flows generated by the project.
- *2 An IPP (Independent Power Producer) builds and operates power generation independently, and sells the electricity produced.