Republic of Indonesia / Loan Insurance for Muara Laboh Geothermal Power Expansion Project

Nippon Export and Investment Insurance (NEXI; Chairman and CEO: Atsuo Kuroda) has decided to provide insurance for loans extended by commercial financial institutions to Muara Laboh Geothermal Power Expansion Project (approximately 83 MW) in Republic of Indonesia (Indonesia). The project is developed by PT Supreme Energy Muara Laboh (the Project Company) owned by Sumitomo Corporation (Sumitomo) and INPEX Corporation with their local partner PT Supreme Energy. The Project Company has been operating the existing geothermal power plant¹ (approximately 85 MW) next to this expansion project in West Sumatra Province of Indonesia.

Sumitomo has been awarded as the EPC contractor for the expansion project, jointly with local partners, to deliver geothermal power generation system including a steam turbine and generator manufactured by Fuji Electric Co., Ltd. The plant is scheduled to start commercial operation in 2027, and the power generated at this geothermal plant will be sold to the state-owned electricity company, PT Perusahaan Listrik Negara (PLN), over approximately 25 years under the Power Purchase Agreement.

Of the project financing procured by the Project Company from Japan Bank for International Cooperation (JBIC), Asian Development Bank (ADB), Mizuho Bank, Ltd., MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation and Hyakugo Bank, Ltd., NEXI provides cover for approximately USD 139 million loan extended by the commercial banks. This project is also in line with the Japanese government’s Infrastructure System Overseas Promotion Strategy 2030, which identifies “GX (Green Transformation), Climate Change and Environment related initiatives”, as one of the objectives, such as the cooperation toward net zero according to a partner country's circumstances. Also, this project aligns with the objectives of Asia Zero Emissions Community (AZEC) concept advocated by the Japanese government and is expected to promote decarbonization in Indonesia and to create business opportunities for Japanese companies in this field.

In its “Long Term Strategy for Low Carbon and Climate Resilience 2050” in July 2021, the Indonesian government announced to install geothermal power up to 23 GW by 2050 to achieve carbon neutral by 2060. Indonesia owns one of the world's largest geothermal energy resources, and geothermal power generation is positioned as a driving force for the spread of renewable energy in this country, and further development is expected in this field. This project is expected to play an important role in terms of the energy transition in Indonesia and will contribute to support the country's electricity supply and decarbonization. NEXI’s financial support for this project will promote Japanese participation in the geothermal development in Indonesia and will also help Japanese companies maintain and strengthen international competitiveness in energy development market including renewable energy.

Since this project will contribute to environmental protection and climate change countermeasures, it also complies with the LEAD Initiative² (in the Environment and Energy field) which NEXI actively promotes.

NEXI will continue to actively support Japanese companies to expand their global business, as a Japanese financial institution to implement national policies.

（Reference）

Insured	Mizuho Bank, Ltd., MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation and Hyakugo Bank, Ltd.
Insured value	Approximately USD 139 million
Tenor	Approximately 19 years
Covered risk	Political risk 100%, Commercial risk 90%

Contact:
Power Group, Structured and Trade Finance Insurance Department
Tel: +81-3-3512-7340

¹ NEXI News Release, January 30, 2017
Indonesia / Loan Insurance for Muara Laboh Geothermal IPP Project

² In December 2020, NEXI announced the LEAD Initiative to respond to the business environment with and after the COVID-19. This initiative is intended to actively promote the underwriting of projects, with a focus on contributing to global carbon neutrality, solving social issues, and achieving the SDGs. Under this initiative, we aim to underwrite insurance of total value of JPY 1 trillion by the end of fiscal 2025, while diversifying our funding sources not only from traditional capital providers, but also from institutional investors, etc.