China Eximbank provides $154.8 million preferential buyer’s credit for 230MW Labuan Angin Power Plant Construction Project (Linked to Record ID#67275, #61681)

Project narrative

On October 6, 2003, China Eximbank and the Government of Indonesia signed a $154,872,884 preferential buyer's credit (PBC) agreement [#BLA03042] for the 230MW Labuan Angin Power Plant Construction Project. This agreement follows a $400 million pledge from China in 2002 for infrastructure projects (#67275), which includes this power plant. The pledge stated that loans are to be repaid in 15 years with a 7 year grace period and a 3% interest rate. It is known that the borrower was to use the PBC proceeds to partially finance the cost (approximately $232 million) of a commercial (EPC) contract between Perusahaan Listrik Negara (PLN) — an Indonesian state-owned electricity company — and China Machinery Engineering Corporation (CMEC). Then, on November 10, 2009, China Eximbank increased the face value of the PBC by $31,783,000 (as captured in Record ID#61681) through a supplementary agreement (#BLA03042 SLA 1181) with the borrower. $183,544,240.26 was ultimately disbursed through the PBC. The purpose of the project was to construct a coal-fired power plant with two 115MW power generation units in the village of Labuan Angin (Labuhan Angin) within Tapian Nauli District, Central Tapanuli (Tapanuli Tengah) Regency, and North Sumatra Province (exact locational coordinates: 1.7519953, 98.7305152). Sichuan Chengda Engineering Company and China National Machinery & Equipment Import and Export Corporation were the contractors responsible for implementation. Construction began in 2003. The first and second power generation units were handed over to the project owner (PLN) in April 2009 and November 2009, respectively. The O&M Power Indonesian Labuhan Angin coal fired power plant project lasted for 32 months since 28th, Feb. 2008, the project start date. Then, on January 28, 2010, a project completion ceremony took place. The amount of coal ash produced by the plant per year between 2008 and 2014 ranged from 15,141,825.44 kg to 3,988,441,400.39 kg, which is disposed into the Labuan Angin plant's ash landfill. While the plant has met certain standards through an Environmental Impact Assessment (EIA) and earned an Environmental Feasibility Decree from the Governor of North Sumatra, the coal ash landfill is not included in the scope of the previously mentioned EIA Document. As of 2015, the plant had yet to obtain an Environmental Evaluation Document for the landfill ash resulting from normal operations. According to news sources that are not currently accessible, a report from April 2017 stated pollutants from the plant led to an influx of respiratory disease for villagers living in the area and had a clear negative impact on nearby fish populations. The adverse health and environmental impacts represented possible grounds for a lawsuit under Environmental Law Number 32, as described by the Director of the Legal Aid Consultation Institute (LKBH) Adv Parlaungan Silalahi. In April 2023, the Labuan Angin power plant was identified as one of 33 coal power plants for early retirement by the Ministry of Energy and Mineral Resources. The decision is part of the government's efforts to work towards their 2060 net zero emission goal. It is expected that foreign donors will finance the early retirement of these power plants. The Labuhan Angin plant also had replacement parts installed in May 2024.