Project Financing and Political Risk Guarantee for Sarulla Geothermal Power Plant Project in Indonesia
Supporting World-Class Geothermal Power Project Undertaken by Japanese Companies

• Region: Asia
• Infrastructures
• Environment
• Project Finance

1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed on March 28 a loan agreement totaling up to USD492 million (JBIC portion) with Sarulla Operations LTD (SOL), a Cayman Islands company, in which ITOCHU Corporation and Kyushu Electric Power Co., Inc. as well as other investors have equity stakes to fund the Sarulla Geothermal Power Plant Project in the Republic of Indonesia. The loan, provided in project financing,^*1 is cofinanced with Asian Development Bank, and a group of private financial institutions comprising Mizuho Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation, Tokyo branches of Société Générale Bank, ING Bank N.V., and National Australia Bank Limited. The overall cofinancing amount reaches approximately USD1,170 million. JBIC also provides political risk guarantee for the portion cofinanced by private financial institutions.
    
2. In this Project, SOL will build and operate a 320.8 MW geothermal power plant (3 generating units) in Sarulla region, North Sumatra Province, and sell electricity generated by this plant to PT. PLN (Persero), a state-owned power utility in Indonesia, for 30 years.
    
3. Indonesia's power demand is projected to grow at an annual average rate of 8.5 percent over the next decade. Japanese companies participate in this geothermal power plant project not only as investors but also, by utilizing Japanese technologies, to conduct operation and maintenance of the power plant over a long period of time. This is the first project financing JBIC has provided to a geothermal power plant project. This loan supports Japanese companies for participating in an overseas infrastructure project and thereby contributes to maintaining and improving the international competitiveness of Japanese industries.
    
4. In addition, as this is currently one of the world's largest geothermal power plant projects, it is significantly effective as a measure against global warming and consistent with the "Actions for Cool Earth", the proactive diplomatic strategy for countering global warming, made public by the Government of Japan on November 15, 2013.
    
5. JBIC will continue to support overseas infrastructure business activities of Japanese companies by drawing on a variety of financial facilities and schemes for structuring projects and by performing its risk-assuming function.

Note

1. *1 Project finance is a financing scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.