Indonesia: Adaro's unit Tanjung Power secures financing of $422M for Tabalong power plant project

Indonesia: Adaro's unit Tanjung Power secures financing of $422M for
Tabalong power plant project

PT Tanjung Power Indonesia (TPI) on Jan. 23rd, 2017 has reached financing
close for its 2×100 MW coal-fired power plant project in Tabalong Regency,
South Kalimantan.

Total investment for this project is approximately US$545 million, and TPI
has closed financing and received commitments of approximately USD422
million (including contingency facility of USD13 million) from six
commercial banks.

The six banks are 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 US$400 million, Adaro said in a
statement.

The 2×100 MW coal-fired power plant is located in Tabalong Regency, South
Kalimantan. This project will apply the Build, Own, Operate, Transfer (BOOT)
scheme. This project is part of the Fast Track Program Project phase 2
(FTP-2) to meet Indonesia's growing electricity demand.

PT Tanjung Power Indonesia (TPI) is a consortium of PT Adaro Power (AP)
(65%) and PT East-West Power Indonesia (EWPI) (35%). PT Adaro Power is a
wholly-owned subsidiary of PT Adaro Energy Tbk, while PT East-West Power
Indonesia is a wholly owned subsidiary of Korea East-West Power Co Ltd.

President Director of PT Adaro Energy Tbk (AE), Garibaldi Thohir, remarked
"This is another significant milestone following previous Financing Close of
PT Bhimasena Power Indonesia (BPI) and we are thankful for the support from
PT Perusahaan Listrik Negara (Persero) (PLN), all sponsors, lenders,
government institutions and other stakeholders."

"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 said.

The Tabalong power plant 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 15th, 2014. The
coal supply will be provided by PT Adaro Indonesia.

TPI has actually started construction since June 2016, six months before
reaching Financing Close by using shareholder funds, 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.

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 USD88 million.

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.

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.

All partners have been in full support and committed to the project. All the
stakeholders involved including the Government of Indonesia, PLN and the
creditors remain committed to the project from the beginning. 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.

From the beginning of construction and throughout its operation, TPI will
contribute to the social and economic development particularly in Tabalong
Regency and South Kalimantan region, through job creation and numerous
social development programs to create shared value between TPI and the
community.

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Link to Original Article:
https://www.rambuenergy.com/2017/01/adaros-unit-tanjung-power-secures-financ
ing-of-422m-for-tabalong-power-plant-project/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com