Project Finance for Expansion of Cirebon Coal-fired Power Plant in Indonesia
Supporting Japanese companies' participation in IPP project for ultra-supercritical power plant

  • Area: Asia
  • Infrastructures
  • [Project Finance]
  • Overseas Investment Loans

 
November 14, 2017
  1. The Japan Bank for International Cooperation (JBIC; Governor: Akira Kondoh) signed on April 18, 2017 a loan agreement with PT. Cirebon Energi Prasarana (CEPR), a corporation in the Republic of Indonesia (Indonesia) invested in by Marubeni Corporation, JERA Co., Inc., and others, for project finance,*1 amounting to approximately USD731 million (JBIC portion) to expand the Cirebon coal-fired power plant in Indonesia. In accordance with the loan agreement, the initial disbursement was made to CEPR.*2 This loan is co-financed by the private financial institutions, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, and ING Bank N.V., as well as the Export-Import Bank of Korea. The syndicated loans bring the total co-financing amount to approximately USD1,740 million. The financing provided by the private financial institutions will be covered by insurance from Nippon Export and Investment Insurance (NEXI) and by guarantees from the Export-Import Bank of Korea.
     
  2. This project involves the construction, ownership, and operation by CEPR of an ultra-supercritical coal-fired power plant with an installed capacity of 1,000MW (1,000MW x 1 unit) in Cirebon Regency, West Java Province in Indonesia. The electricity from this plant will be sold to PT PLN (Persero), a state-owned power utility in Indonesia, for 25 years.
     
  3. This loan offers financial support to an overseas infrastructure project in which Japanese companies are participating as investors to engage in long-term operation and management utilizing Japan's advanced technology. This loan is also intended to contribute to maintaining and increasing the international competitiveness of Japanese industries. In its export strategy for infrastructure systems, revised in May 2017, the Japanese government expressed its intention to expand orders for infrastructure systems, including the design, construction, operation and management of infrastructure, as well as investments in local businesses. This loan is also in line with this government strategy. Furthermore, this project, which is an ultra-supercritical coal-fired IPP*3 project, introduces efficient and environmentally friendly technology to Indonesia.
     
  4. Steady economic growth has boosted power demand in Indonesia, and the Indonesian government has committed to promoting its 35,000MW power plants construction program for five years, from 2015 to 2019. Against this backdrop, this project is positioned as a part of the program. The financing for the project is expected to contribute to the country's economic development through stable power supply.
     
  5. As Japan's policy-based financial institution, JBIC will continue to provide financial support to assist Japanese companies in expanding overseas infrastructure businesses, in collaboration with multilateral public organizations, by drawing on its various financial instruments for structuring projects, and by expanding its risk-taking ability.
     
Note
  1. *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. *2 After the Environmental Permit for this project that was issued by West Java Province in May 2016 was declared void according to the April 2017 ruling in the local administrative lawsuit in Indonesia against West Java Province, the new Environmental Permit was issued in July 2017. Since JBIC has examined the new Environmental Permit and it is confirmed that the new Environmental Permit is in accordance with JBIC's Environmental Guidelines, JBIC made the initial disbursement to CEPR.
  3. *3 An IPP (Independent Power Producer) is an independent producer of electric power who builds and operates electric power facilities, and makes electric power available for sale to power utilities.
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