Janeman Latul

The project's final combined capacity will be 1,475 megawatts. (Antara Photo)

Two Power Producers Land $1.8b in Loans to Build Plants in Indonesia

Two groups of banks, most of them Japanese and led by the Japan Bank for International Cooperation, have agreed to loan $1.8 billion to independent power producers PT Paiton Energy and PT Cirebon Electric Power to build coal-fired electricity plants with a combined capacity of 1,475 megawatts.

The first consortium will loan $1.21 billion to fund a $1.5 billion expansion of Paiton’s East Java plant, which will increase capacity by 815 megawatts. Paiton is owned by Mitsui, International Power and Tokyo Electric Power.

The second loan, for $595 million, will be used by Cirebon Electric Power to build a new 660 MW plant in Cirebon, West Java. Cirebon Electric Power is 32-percent owned by Japanese company Marubeni. The other three shareholders are Korea Midland Power, PT Indika Energy and coal miner Samtan Co.

“It’s a great pleasure for us to have signed the two projects,” Fumio Hoshi, JBIC’s executive director, said after the loan agreement was signed late on Monday. “We’re pleased to see Japanese companies contributing to the infrastructure sector in Indonesia.”

“According to Indonesia’s long-term power-sector plan, the country’s electricity demand is projected to grow at an annual average rate of 9 percent through 2027. Infrastructure development in the power sector is thus an urgent issue on the national agenda.”

Shintaro Ambe, chief operating officer of Mitsui’s infrastructure project unit, said Paiton had a 30-year contract to sell electricity to Indonesia’s state-owned power company PT Perusahaan Listrik Negara.

The additional capacity at Paiton should come on line by April 2012, he said.

Paiton president director Keizo Ogata said PLN would pay Paiton 4.319 cents per kilowatt hour.

Shigeru Yamazoe, Marubeni’s managing executive officer for power projects and infrastructure, said the Cirebon plant would cost $850 million and would be operational by November 2011.

Cirebon Electric Power vice president Joseph Pangalila said the company would sell electricity to PLN for 4.361 cents per KWH.

Fumio said the JBIC had provided 60 percent of the Paiton loan with Bank of Tokyo-Mitsubishi, Mizuho Corporate Bank, Sumitomo Mitsui Banking Corp., Sumitomo Trust and Banking, and the Tokyo-branches of BNP Paribas, HSBC, Credit Agricole and ING providing the rest.

Fumio said JBIC will provide $214.2 million of Cirebon loan, while the Export-Import Bank of Korea will provide $148.2 million, and the rest will be financed by Bank of Tokyo-Mitsubishi, Mizuho Corporate Bank, Sumitomo Mitsui Banking Corp., and the Tokyo branch of ING.

For the Paiton loan, JBIC is providing a political risk guarantee to cover the other lenders in the case of unforeseen political events.

JBIC and Korea Eximbank will together provide a similar guarantee for the Cirebon loan.