Foreign banks to finance Dieng-Patuha geothermal project

A number of foreign creditors including CreditSuisse First Boston, ABN Amro Bank NV, MBIA Insurance Corporation and CBIC Asia Limited have expressed interest in funding the geothermal power projects in Dieng, Central Java and in Patuha, West Java, Bisnis Indonesia reported on Wednesday.

The interest was expressed by the four international financial institutions? senior executives in a letter addressed to Indonesia?s Minister of Finance Boediono.

In the letter the four financial institutions offered to provide the financing for the resumption of the delayed geothermal power projects. They, however, demanded a guarantee and protection both financially and legally if they were allowed to refinance the projects.

The Patuha and Ding projects were initially developed by Mid American Energy Holdings Co but they were postponed in early 1998 as part of the government?s retrenchment program to cope with the country?s financial crisis.

As the consequence, the government was ordered to pay claim of U$260 million to the U.S-based insurance agency OPIC and another $140 million to lenders.

In order to raise funds for the claim settlement, the government has decided to resume the Dieng and Patuha power projects which will each have a capacity of 60 MW. But for the purpose, the government needs to inject a fresh investment of about $440 million. (*)