Republic of Indonesia/Loan Insurance for Jawa 1 LNG to Power Project
Nippon Export and Investment Insurance
Nippon Export and Investment Insurance (NEXI : Chairman and CEO : Kazuhiko Bando) has decided to provide insurance for commercial bank loans for a project in Indonesia, which constructs and operates a gas-fired power plant and a floating storage and regasification unit (FSRU). The project is undertaken through two project companies: 1) PT Jawa Satu Power sponsored by investors including Marubeni Corporation, Sojitz Corporation and PT Pertamina (Persero) (hereinafter referred to as the “Pertamina”) and 2) PT Jawa Satu Regas sponsored by those including the aforementioned three companies and Mitsui O.S.K. Lines, Ltd. This is the first case signed in Asia and also covered by NEXI, as project financing in the so-called LNG to Power project which develops power generation business and liquefied natural gas (LNG)-related business in an integrated manner.
In the project, project companies respectively construct a 1,760 MW gas-fired power plant and an FSRU with 170,000 m³ storage capacity in West Jawa Province, Indonesia, aiming to sell generated power to the country’s national electricity power company PT PLN (Persero) over 25 years from 2021 when operations are expected to start. Over the loan period, Marubeni Corporation and Mitsui O.S.K. Lines, Ltd. will extend their support to each project company to run operations in the power generation business and in the FSRU business, respectively, using their experiences obtained through global business. This scheme, utilizing Japan’s advanced technology, expertise and financial strength, is in line with the intent of the “Partnership for Quality Infrastructure” promoted by the Japanese government.
NEXI’s support to the project where Japanese companies are engaged in LNG’s storage and regasification also fits with the policies of the Japanese government which has announced support for expanding the use of LNG in Asia.
The project is placed on the list of the U.S.-Japan infrastructure cooperative activities designated under the U.S.-Japan Economic Dialogue led by both governments, since it has adopted equipment including gas turbines produced by a U.S. manufacturer General Electric Company. It is also in line with the “Free and Open Indo-Pacific Strategy”.
Moreover, this is the first project under a memorandum of understanding (MOU)1 between NEXI and Pertamina signed in December 2015, targeting to strengthen cooperation to encourage trade and investment between Japan and Indonesia.
The loans are provided through joint financing by Japan Bank for International Cooperation (JBIC); Mizuho Bank, Ltd.; MUFG Bank, Ltd.; Oversea-Chinese Banking Corporation Ltd.; Crédit Agricole Corporate and Investment Bank, Tokyo Branch; Société Générale Tokyo Branch; and others. Of the loans, NEXI provides insurance for a portion provided by commercial banks, worth USD 403 million in total.
NEXI also plans to underwrite insurance for a guarantee that Sojitz Corporation—one of the sponsors—provides in respect of the loans to be provided to each project company by a commercial bank to fund the costs associated with construction of the plant (equity bridge loan). (NEXI also plans to underwrite insurance for the investment made by Sojitz Corporation upon and after the commencement of commercial operation of the plant and repayment of the equity bridge loan with respect to which Sojitz Corporation provides a guarantee until the end of the project period.)
The Indonesian government is promoting a 35 GW power plant program in order to meet increasing domestic demand for electricity due to its economic growth. By providing financial support to the project which introduces cutting-edge high-efficiency gas turbines, NEXI is expected to help Japanese companies to expand their business in Indonesia and to maintain and strengthen their international competitiveness in the environmental-friendly high-efficiency power generation business, as well as to contribute to the development of Indonesian society and economy.
As Japan’s policy-based financial institution, NEXI continues to actively support overseas business expansion of Japanese companies.
| Borrower | PT Jawa Satu Power PT Jawa Satu Regas |
| Insured | Mizuho Bank Ltd.; MUFG Bank, Ltd.; Oversea-Chinese Banking Corporation Ltd.; Crédit Agricole Corporate and Investment Bank, Tokyo Branch; Société Générale Tokyo Branch |
| Insurable Value | USD 403 million in total |
| Tenor | 21 years |
| Covered Risks | Political risk 100% and commercial risk 90% |
Contact: Power Group, Structured and Trade Finance Insurance Department
Tel: +81-(0)3-3512-7340
Overseas Investment Insurance Underwriting Group, Underwriting Department
Tel: +81-(0)3-3512-7668
1 Regarding the MOU on cooperation between NEXI and Pertamina, please refer to our topics (news release) dated on December 21, 2015.