PTBA signs $1.2b loan agreement for PLTU Sumsel 8

State controlled coal firm PT Bukit Asam (PTBA) announced on Friday that its subsidiary, PT Huadian Bukit Asam Power (HBAP), has signed a loan facility agreement worth US$1.2 billion with the Export-Import Bank of China (CEXIM) for the development of PLTU Banko Tengah (Sumsel 8) mine-mouth power plant (2x620 MW) in Tanjung Enim disrict, Muara Enim regency, South Sumatra.

The agreement was signed by the leaders of the companies, including PTBA?s President Director Milawarma, on Friday at the Great Hall of the People at the time President Joko Widodo was on a state visit to the country.

The $1.2 billion loan to be provided by CEXIM represents 75 percent of the total value of the project, which is $1.59 billion. HBAP will cover the remaining 25 percent of the investment or $400 million. PTBA as the holder of 45 percent stake in HBAP is obliged to cover $180 million of the $400 million, while the rest will be covered by its partner, China Huadian Hongkong Company Ltd. (CHDHK).

Financial closing is expected to occur in the second semester of this year, which will be followed by groundbreaking in early 2016. Commissioning is targeted to occur in mid-2019. State owned electricity firm PT Perusahaan Listrik Negara (PLN) has guaranteed that the Sumatra-Java interconnection powerline will have been completed by the time the power plant has come onstream so that the power can be transmitted to Java.

The loan has a tenor of 10 years with a grace period of 45 months, which is the time length needed for the construction of the project. Coal supply agreement between PTBA and HBAP for PLTU Sumsel 8 has been signed, involving the supply of 5.4 million tons of coal per year for the power plant over a period of 20 years. PTBA has allocated 150 million tons of coal of 4,200 kcal/kg CAR quality from its mine in Banko Tengah, Tanjung Enim.

There are several other contracts that have been signed, including the Engineering, Procurement and Construction (EPC) contract between by HBAP and CHDHK; the Operation & Maintenance (O&M) contract between HBAP and PT China Huadian Power Plant Indonesia; the Completion Guarantee Agreement (CGA) contract between HBAP, CHDHK and China Huadian Corporation (CHD); and Power Purchasing Agreement (PPA) between HBAP and state owned electricity firm PT Perusahaan Listrik Negara (PLN) for a period of 25 years.

Editing by Johannes Simbolon