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Indonesia / Loan Insurance for Lontar Extension Coal Fired Steam Power Plant


March 16, 2016

Nippon Export and Investment Insurance

Nippon Export and Investment Insurance (NEXI) has decided to provide insurance for loans extended by a commercial bank for construction of an ultra-supercritical coal fired power plant in Banten Province, Java, Indonesia. The plant of 315 MW capacity will be constructed by PT PLN (Persero), a power utility wholly-owned by the Indonesian Government. This will be the first PLN-related project in which NEXI will provide insurance for a loan without the Indonesian government’s involvement or guarantee; loans through the government or with government guarantee were a prerequisite for NEXI’s loan insurance for PLN projects.

The project is to add Unit 4 Lontar power plant to the existing three units. Sumitomo Corporation has been awarded an EPC contract for the Unit 4 plant jointly with Black & Veatch International Company of the US and PT. Satyamitra Surya Perkasa of Indonesia. Sumitomo will supply main equipment including boiler manufactured by IHI Corporation and steam turbine and generator by Toshiba Corporation. To purchase such equipment, PLN will borrow funds from Japan Bank for International Cooperation (JBIC) and Sumitomo Mitsui Banking Corporation (SMBC). NEXI’s insurance will support the loans from SMBC.

To meet its surging electricity demand driven by economic growth, Indonesia is planning to develop new power source for 35 GW capacity from 2015 to 2019, and the Lontar project is based on this plan. By providing financial support for export of Japanese equipment used in this project, NEXI expects to promote Japanese business in Indonesia and also help Japanese companies maintain and strengthen international competitiveness.

As Japan’s official export credit agency, NEXI will continue to actively support Japanese exports.


Reference
Borrower PT. PLN (Persero)
Insured Sumitomo Mitsui Banking Corporation
Insured amount Equivalent to USD127 million
Tenor Approx. 15 years and 8 months
Covered risks Political Risk (97.5%), Commercial Risk (95%)
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