Bank of China contributes $84.6 million to syndicated buyer’s credit loan for 990MW Jabar Indramayu Power Plant Construction Project (Linked to Record ID#100701, #100703, #100704, #100705)

Project narrative

On May 27, 2008, Perusahaan Listrik Negara (PLN) — an Indonesian state-owned electricity company — signed a $592 million syndicated buyer’s credit loan agreement with a group of Chinese and non-Chinese banks for the the 990MW Jabar Indramayu Power Plant Construction Project. The loan carried the following borrowing terms: a 3-year grace period, a 13-year maturity, and annual interest rate of 6-month LIBOR (2.856% in May 2008) plus a 0.785% margin. The final maturity date of the loan is May 27, 2021. The borrower purchased buyer’s credit insurance from Sinosure, covering 95% of the loan. Indonesia’s Ministry of Finance also issued a sovereign guarantee in support of the loan. Members of the loan syndicate included Bank of China, BNP Paribas, China Construction Bank, China Development Bank, ICBC, Société Générale, China Citic, ANZ Bank, Bayerische Landesbank, Calyon, Credit Suisse, Fortis, ING, Natixis, RBS, WestLB, Mizuho, and Sumitomo Mitsui Banking Corporation (SMBC). Bank of China, China Construction Bank, China Development Bank, ICBC, and China Citic jointly contributed an estimated $423 million. Record ID#38606 captures the estimated financial commitment of Bank of China, Record ID#100701 captures the estimated financial commitment of ICBC, Record ID#100703 captures the estimated financial commitment of China Development Bank, Record ID#100704 captures the estimated financial commitment of China Construction Bank, and Record ID#100705 captures the estimated financial commitment of China CITIC Bank. The proceeds of the loan were to be used by the borrower (PLN) to finance 85% of the cost of a $696.73 million commercial (EPC) contract. The remaining 15% of the contract cost was to be provided in local currency financing arrangements by Indonesian banks. The purpose of the project was to construct a 3x330 MW coal-fired steam power plant on a 83-hectare site in Sumur Adem Village, Sukra District, Indramayu Regency, West Java Province (exact locational coordinates: -6.2747375, 107.9704303). The power plant required the installation of three 1050t/h subcritical boilers and three 330MW turbo-generator units, which were to be cooled down directly by seawater. China National Machinery Industry Corporation, the China National Electric Equipment Corporation and PT Penta Adi Samudera were the contractors responsible for implementation. Construction began in 2007. The 1st and 2nd unit of the 3x330MW power plant started commercial operations in January 2011 and May 2011, respectively, while the 3rd unit passed performance testing in September 2011. The plant officially opened on October 12, 2011. It was part of the fast-track program by Indonesian government to add power plants around the country, which total to about 10000 MW. In December 2014, Indramayu Regency officials alleged that a former Regency government official, Irianto M.S. Syafiuddin, had embezzled 4.1 billion Rupiah, or about $300,000, in the land acquisition process for the Indramayu plant in 2004. Since its completion, there has been significant local opposition to the Indramayu plant. Smoke and toxic waste produced by the plant has affected the livelihoods of residents in the surrounding communities by diminishing crop yields and catches of shrimp and fish significantly, threatening the main source of income of local farmers and fisherman. Additionally, smoke plumes from the plant’s chimney have caused respiratory issues among those living near the plant. Moreover, a 2000MW expansion of the power plant was announced in 2015. However, due to persistent protesting by Indramayu residents and efforts to accelerate the global phase-out of coal, the Japanese International Development Agency (JICA), who was to finance the expansion, withdrew from funding the project.