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Indonesia / Loan Insurance for Muara Laboh Geothermal IPP Project


January 30, 2017

Nippon Export and Investment Insurance

Nippon Export and Investment Insurance (NEXI) has decided to provide insurance for commercial bank loans made to finance a geothermal power plant (80MW) which will be constructed in West Sumatra Province of Indonesia by PT. Supreme Energy Muara Laboh (owned 35% by Sumitomo Corporation, 35% by Electrabel S.A. and 30% by PT. Supreme Energy). This is going to be the first time for NEXI to cover a risk of geothermal resources capacity associated with a geothermal power project financing.

For the plant construction, Sumitomo has been awarded an EPC contractor jointly with PT. Rekayasa Industri of Indonesia to deliver geothermal power generation system including a steam turbine and generator manufactured by Fuji Electric Co., Ltd. The plant is scheduled to start operation in 2019. Along with the financial support, West Japan Engineering Consultants, Inc., a subsidiary of Kyushu Electric Power Company Inc., will also provide technological support for the project company as a technical service advisor, such as well drilling strategy, supervision, and make-up well drilling. The financial support is provided by Japan Bank for International Cooperation (JBIC), the Asian Development Bank (ADB), Mizuho Bank, Ltd., the Bank of Tokyo-Mitsubishi UFJ, Ltd. and Sumitomo Mitsui Banking Corporation. NEXI’s insurance will support the commercial banks’ loans. Japanese support in this project in the form of technology, project development and management as well as financing support is in conformity with the intent of “Partnership for Quality Infrastructure” promoted by the Japanese government.

To meet its surging electricity demand driven by economic growth, The Government of Indonesia is promoting its program to develop 35 GW capacity from 2015 to 2019. In this respect, the country is willing to develop the world’s second largest geothermal energy resources next to the U.S., which have attracted increasing attention and interest as renewable energy. Once starting operation, the Muara Laboh geothermal plant is expected to help increase the power supply in Indonesia by the power purchase agreement with the state-owned electricity company, PLN, over the next 30 years. 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.

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

(Reference)
Borrower PT. Supreme Energy Muara Laboh
Insured (Lender) Mizuho Bank, Ltd., the Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation
Insurable Value Equivalent to USD 132 million
Tenor Approx. 20 years
Covered risks Political Risk 100%, Commercial Risk 90%
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