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Indonesia / Loan Insurance for Muara Karang Combined Cycle Power Plant


March 13, 2017

Nippon Export and Investment Insurance

Nippon Export and Investment Insurance (NEXI) has decided to provide insurance for loans extended by a commercial bank for construction of a Combined Cycle Power Plant in Muara Karang, located northwest of central part of Jakarta, Java, Indonesia. The plant of 500 MW capacity will be constructed by PT PLN (Persero), a power utility wholly-owned by the Indonesian Government. NEXI will provide insurance for a loan without the Indonesian government’s guarantee as well as we did for Lontar Extension Coal Fired Steam Power Plant Project in last March and Jawa2 Combined Cycle Power Plant in last October.

NEXI has released the creation of insurance for sub-sovereign transactions in last April (http://nexi.go.jp/topics/cover/2016033004.html) for achieving the “Partnership for Quality Infrastructure” which is Abe, the prime minister of Japan announced in May 2015 and this is the second underwriting of insurance for loans to sub-sovereign since the clarification.

The project, Mitsubishi Corporation has been awarded an EPC contract jointly with PT. Wijaya Karya of the Indonesia. Mitsubishi will supply main equipment including gas turbine, steam turbine manufactured by Mitsubishi Hitachi Power Systems and generator by Mitsubishi Electric. To purchase such equipment, PLN will borrow funds from Japan Bank for International Cooperation (JBIC), The Bank of Tokyo-Mitsubishi UFJ (BTMU) as Agent, Mizuho Bank (Mizuho), Australia and New Zealand Banking Group (ANZ). NEXI’s insurance will support the loans from Commercial Banks.

To meet its surging electricity demand driven by economic growth, Indonesia is planning to develop new power source for 35 GW capacity from 2015 to 2019, and the Muara Karang project is based on this plan. By providing financial support for export of Japanese equipment used in this project, NEXI expects to promote Japanese business in Indonesia and also help Japanese companies maintain and strengthen international competitiveness.

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

(Reference)
Borrower PT. PLN (Persero)
Insured The Bank of Tokyo-Mitsubishi UFJ (BTMU) as Agent, Mizuho Bank (Mizuho), Australia and New Zealand Banking Group (ANZ)
Insured amount Equivalent to JPY6.2Billion+USD14.9 million
Tenor Approx. 7years
Covered risks Political Risk (100%), Commercial Risk (100%)
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