Narrative
Full Description
Project narrative
On December 4, 2012, China Development Bank and Pt. DSSP Power Sumsel (DSSP PSumsel) — a subsidiary of PT Dian Swastatika Sentosa TBJ, which itself a subsidiary of Sinar Mas Group (a private company) — signed a $318 million loan agreement for the 300MW Sumsel-5 Power Plant (SS-5) Construction Project. The loan has a 10-year maturity and it carries an annual interest rate of 6-month LIBOR (0.515% in December 2012) plus a 5.2% margin. It is to be repaid in fifteen (15) installments within (10) ten years of the issuance of the loan. It is collateralized by, among other things, corporate guarantees from the DSSP and a sister company called PT Manggala Alam Lestari (MAL) and fiduciary securities on insurance claims, receivables incurred in relation to PPA between DSSP PSumsel and PLN, DSSP PSumsel’s building, office and miscellaneous equipment, vehicles and power plant assets and pledge of DSSP PSumsel shares owned by DSSE. Also, as of December 31, 2016, the 300MW Sumsel-5 Power Plant (SS-5) itself was pledged as a source of collateral for the CDB loan. The proceeds of the loan were to be used by the borrower to finance an EPC contract with China National Electric Engineering Co. Ltd. (CNEEC) and Harbin Power System Engineering & Research Institute (HPI). On February 11, 2012, DSSP Sumsel had signed an equipment supply contract with CNEEC with contract prices amounting to $208,380,392. On the same day, a Design, Engineering and Construction contract was signed with HPI for the contract price of $89,305,882. HPI is designated to perform the design, engineering, installation and construction for the project. The 300MW Sumsel-5 Power Plant (SS-5) Construction Project was implemented as an Independent Power Project (IPP) and its total cost ($400 million) was financed with a mix of debt and equity. Sinar Mas Group was the source of equity. The purpose of the project was to install a 300-megawatt (MW) coal-fired power plant — with two 150MW generators (Unit 1 and Unit 2) — in Sindang Marga, Musi Banyuasin Regency, South Sumatra Province (exact locational coordinates: -2.1562529, 103.7552716). CNEEC was the EPC contractor responsible for implementation. A formal groundbreaking ceremony took place on May 23, 2013. Unit 1 and Unit 2 completed their 168-hour tests in March 2016. The power plant went into commercial operation in December 2016. It was officially handed over to the project owner on January 15, 2017.
Staff comments
1. This project is also known as the SUMSEL-5 CFSPP 2 × 150MW Power Plant and Sumsel-5 Pithead Coal-fired Power Plant Project. The Chinese project title is 印尼SUMSEL-5 2x150MW坑口燃煤电站项目. 2. The Sumsel-5 Power Plant benefits from a favorable 25-year power purchase agreement (PPA) with PT Perusahaan Listrik Negara (PLN), which was signed in November 2011. The PPA provides capacity and energy payments to cover the plant's fixed and variable costs, respectively, as long as the power plant meets minimum contractually required levels for availability factor and heat rate. Fuel supply risk is mitigated via Sumsel's 25-year coal supply agreement with its sister company, PT Manggala Alam Lestari (MAL), and the pass-through of fuel costs to PLN. Perusahaan Listrik Negara (PLN) is an Indonesian government-owned corporation that has a monopoly on electricity distribution in Indonesia and generates the majority of the country's electrical power. The project is coded as mixed intent as it is a USD-denominated facility used to finance commercial supply and EPC contracts with Chinese companies, which resembles that of an export buyer's credit.