Narrative
Full Description
Project narrative
On June 19, 2023, PT Kilang Pertamina Balikpapan (KPB) — a special purpose vehicle that is owned by Kilang Pertamina Internasional (KPI), which is a processing and petrochemical subholding of Pertamina (an Indonesian state-owned oil and natural gas corporation) — secured a $3.1 billion syndicated facility (loan) agreement with a group of 22 Chinese and non-Chinese creditors and 4 export credit agencies for the RDMP Balikpapan Expansion Project. The facility consists of five tranches: - a $600 million, ECA direct tranche with a 13.7-year maturity, a 1-year grace period, and an interest rate of 6-month SOFR plus a 1.65% margin; - a $577 million commercial tranche with a 13.7-year maturity, a 1-year grace period, and an interest rate of 6-month SOFR plus a 2.25% margin; - a $194 million, SACE-covered tranche with a 13.7-year maturity, a 1-year grace period, and an interest rate of 6-month SOFR plus a 1.8% margin; - a $1.04 billion, K-SURE-covered tranche with a 13.7-year maturity, a 1-year grace period, and an interest rate of 6-month SOFR plus a 1.5% margin; - a $590 million, KEXIM-covered tranche with a 13.7-year maturity, a 1-year grace period and an interest rate of 6-month SOFR plus a 1.5% margin. The loan principal is repayable semi-annually with first payment due on July 31, 2024 and the final payment due on January 31, 2037. The loan has conditions precedent and covenants that must be fulfilled by the borrower. Participants in the syndicate included Credit Agricole CIB, Societe Generale, Banco Santander, Standard Chartered, Deutsche Bank, SMBC, HSBC, Bank of China, Bank Mandiri, Bank Rakyat Indonesia, Sarana Multi Infrastruktur, DZ Bank, KEB Hana, Maybank, Mizuho, MUFG, National Bank of Kuwait, OCBC, Shinhan Bank, and UOB. The Export-Import Bank of Korea, K-SURE, SACE, and the United States Export-Import Bank directly contributed to the ECA tranche. Bank of China reportedly contributed $39.36 million to $577 million tranche, $13.86 million to the $194 million tranche, $66.64 million to the $1.04 billion tranche, and $38.21 million to the $590 million tranche. The purpose of the project is to facilitate the expansion of Pertamina’s refinery situated on Borneo Island in East Kalimantan. Under a joint study agreement, Pertamina is partnering with Air Liquide to implement cutting-edge carbon capture and utilization technologies within the $6 billion Balikpapan refinery. The refinery's expansion is scheduled to commence operations on October 1, 2025. Upon completion, the expanded refinery is expected to see its capacity increase from 260,000 barrels per day (bpd) to 360,000 bpd. The RDMP Balikpapan Expansion Project represents a key component of the Government of Indonesia’s broader $17 billion national strategic refinery development master plan (RDMP), which is at modernizing five key refineries in alignment with Indonesia's energy transition roadmap towards achieving a net-zero target by 2060. The EPC contractor is a consortium comprising SK Engineering & Construction, Hyundai Engineering, Rekayasa Industri, and Pembangunan Perumahan.
Staff comments
1. The transaction uses a trustee borrower structure created under a trust agreement and supported by a sponsor agreement with KPB to manage the project-level commitments. It also enjoys contractual support from Pertamina that effectively backstops the entire financing. 2. Mizuho Bank provided financial advisory services. 3. The lenders had Allen & Overy as legal counsel while the borrower and sponsors had White & Case. 4. One sources identifies Kilang Pertamina Internasional as the borrower of record. This issue merits further investigation. 5. AidData has estimated the loan’s all-in interest rate — at the time it was issued by adding 1.5% to the 6-month SOFR on June 19, 2023.