TPI obtains $422m loans for S. Kalimantan power plant project
Wednesday, January 25 2017 - 01:31 AM WIB
Private power company PT Tanjung Power Indonesia (TPI) reached financing close on January 23 for its 2x100 MW coal-fired power plant in Tabalong Regency, South Kalimantan, obtaining lending commitment worth US$422 million from six lenders.
TPI is 65 percent owned by PT Adaro Indonesia, which is a subsidiary of IDX-listed coal giant PT Adaro Energy Tbk, and the remaining 35 percent is held by PT East-West Power Indonesia, a subsidiary of Korea East-West Power Co Ltd.
?This is another significant milestone following previous Financing Close of PT Bhimasena Power Indonesia (BPI) and we are thankful for the support from (state-owned electricity firm) PT Perusahaan Listrik Negara (Persero) (PLN), all sponsors, lenders, government institutions and other stakeholders,? said President Director of Adaro Energy Garibaldi Tohir in a statement late Tuesday. BPI is developing a giant 2x1,000 MW coal-fired power plant in Batang, Central Java.
?The successful financing close of both TPI and BPI underscores our strong commitment to be a major contributor in ensuring the success of the 35,000 MW program. This further cements our commitment to develop a power business fit for the future and creating synergies with our coal business. We are now focused on executing the plans of TPI to increase access to electricity in supporting Indonesia?s growth,? he added.
Total investment for the Tabalong power plant project is approximately $545 million, and TPI has closed financing and received commitments of approximately $422 million (including contingency facility of $13 million) from six commercial banks: Korea Development Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., DBS Bank Ltd., Mizuho Bank Ltd., Sumitomo Mitsui Banking Corporation, and The Hong Kong and Shanghai Banking Corporation Limited. This financing is done on a project finance basis with KSURE providing comprehensive cover of approximately $400 million.
This project will sell electricity to PLN under a power purchase agreement (PPA) for 25 years from and after the Commercial Operation Date (COD). The PPA between TPI and PLN was signed on October 15, 2014. The coal supply will be provided by PT Adaro Indonesia, a coal mining subsidiary of Adaro Energy.
Adaro said in the statement that TPI has actually started construction since June 2016, six months before reaching financing close by using shareholder funds, which demonstrates the ultimate proof of Adaro?s commitment in supporting the government of Indonesia and PLN in achieving success in the 35,000 MW program. ?Construction is progressing well, with both unit expected to reach COD in the first half of 2019,? Adaro said.
AP, as the sponsor in the forming consortium of TPI, has signed a sponsor support agreement with the above lenders where AP agrees to support (related to its capital investments in TPI) the project through loan or equity investments in accordance with AP?s ownership in TPI. To support its main business activities, AE guarantees such support that will be given by AP. AE also provides guarantee in accordance with its indirect ownership in TPI with total contingent liabilities of approximately $88 million.
Adaro said the Government of Indonesia, through the Ministry of Finance, provides a government guarantee to this project in the form of a Business Viability Guarantee Letter (BVGL), under which the government guarantees PLN ability to fulfil its payment obligations as stipulated in the PPA.
Adaro said this power plant will use the circulating fluidized bed (CFB) technology which removes sulphur dioxide from flue gas by limestone injection and reduces nitrous oxide emissions due to its low combustion temperature. It also uses bag filter to eliminate ash emissions.
The Engineering, Procurement and Construction (EPC) contractor selected for this project is Hyundai Engineering Co Ltd (HEC). Operation & Maintenance of the power plant will be conducted by TPI.
Editing by Reiner Simanjuntak