Financial closure for CJPP project to be achieved on Oct. 6
Monday, March 31 2014 - 04:49 AM WIB
Financial closure for the 2x1,000 MW coal-fired Central Java Power Project (CJPP) is scheduled to be achieved on Oct. 6, 2014, according to an official of state owned firm guarantee fund PT Penjaminan Infrastruktur Indonesia (PII).
?The Central Java mega power project has passed through the guarantee assessment done by PII. Its financial closure of Rp 40 trillion is scheduled to be achieved in Oct. 6, 2014,? PII?s Chief Financial Officer (CFO) Armand Hermawan said on the sidelines of conference on Indonesia Power Project Finance held by Petromindo.com in Jakarta, recently.
The CJPP is a Public Private Partnership (PPP) project. In PPP project, a financial closure indicates the commencement of the so-called ?concession period?, that is a period in which the asset/project is operated by the private sector as a concessionaire, while the public sector, which helps finance or financially guarantee the project, set the performance standards to follow and ensure the concessionaire meet the standards.
Armand emphasized the guarantee to be provided by PII for the project is an assurance to fulfill PLN?s obligations as stated in the Power Purchasing Agreement (PPA), including the obligation to purchase electricity or make monthly payment in case PLN is not able to absorb all the power plant?s output, buyout obligation in case the PPA is terminated due to political or political force majeure situations and obligation to pay during PLN?s Event of Default (EoD)
?So we don't cover the seller?s EoD, tax for special facilities, and indemnity,? Armand said.
This giant power plant project in Batang, Central Java is developed by PT Bhimasena Power Indonesia, a consortium of several Japanese conglomerates ? J-Power Electric Power Development Co. Ltd., Itochu Corporation ? and Indonesian coal mining company PT Adaro Energy Tbk. through its subsidiary PT Adaro Power. J-Power and Itochu have 34 percent stake each in the joint venture, with the remaining 32 percent is held by Adaro.
With a capacity of 2,000 MW, the project would become Southeast Asia?s biggest power plant by capacity, and a leading example of a public-private partnership (PPP).
The country?s first large-scale PPP project is based on President Regulation No. 67/2005 regarding Cooperation between the Government and Business Entities in the Provision of Infrastructure, and is also part of the Master Plan for Acceleration and Expansion of Indonesia's Economic Development (MP3EI) in that it will be the locomotive of growth in the Java Economic Corridor. The PPP scheme to be applied in the project is Build-Own-Operate-Transfer (BOOT) with the concession period of 25 years. The power plant was initially scheduled for completion in 2016.
The technology to be used is the Ultra-Supercritical Generation Technology, which will make the power plant to be more efficient, have lower carbon emissions, and more environmental friendly compared to other coal-fired power plants currently owned by PLN. In addition, CJPP will be utilizing national low-calorie coal-fired supply. This will help PLN lower the cost of production and reduce the government?s subsidies to PLN.
Editing by Johannes Simbolon