MIGA provides guarantee for RI hydro power plant project
Friday, September 5 2014 - 12:44 AM WIB
The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance and credit enhancement arm of the World Bank Group, announced Thursday that it is supporting the development and operation of a 47-megawatt run-of-the-river hydropower plant and the construction of a transmission line in Indonesia.
The new facility will help reduce the country?s reliance on expensive fuel oil by providing a more affordable and cleaner supply of power to PT Perusahaan Listrik Negara (PLN), Indonesia?s state-owned electric utility company, MIGA said in a statement.
MIGA is providing guarantees of up to US$200 million to the project?s lenders?the Japan Bank for International Cooperation (JBIC) and Mizuho Bank Ltd. MIGA?s coverage is against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract. The project is near the center of Cianjur, West Java, in the upper reaches of the Citarum River. It will use the difference in height between the Saguling and the Cirata hydroelectric power plants to generate electricity.
?Indonesia has huge economic potential. However, the country?s power deficit is a major factor holding back broader and deeper economic growth,? says Keiko Honda, MIGA?s Executive Vice President and CEO.
Indonesia has historically been heavily reliant on fuel oil for electricity generation, which has contributed significantly to the financial difficulties of Indonesia's power sector.
?Supporting private sector investment in the power sector, particularly in renewable energy, is an important goal of the World Bank Group?s Country Partnership Strategy for Indonesia,? says Rodrigo Chaves, World Bank Country Director for Indonesia. ?Limited infrastructure development has not only hindered Indonesia?s economic growth, but also negatively affects efforts to enhance equity and reduce poverty.?
?MIGA guarantees were essential for our decision to proceed with financing this important infrastructure project,? says JBIC. ?In this transaction, the guarantee extended by MIGA is helping us enhance the overall security of the loan.?
?Indonesia represents an important market for Mizuho and we are committed to the development of sustainable infrastructure as a backbone for growth,? says Fumio Inagawa, General Manager of Global Project Finance Division.?We welcome MIGA?s participation as a partner in Rajamandala.?
Editing by Reiner Simanuntak