China Eximbank provides $373 million preferential buyer's credit for 440MW Pangkalan Susu Steam Coal Power Plant Construction Project

Project narrative

On December 22, 2014, China Eximbank and the Government of Indonesia signed a $373,009,532.12 preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK PBC No. (2014) 36 Total No. (330)] for the 440MW Pangkalan Susu Steam Coal Power Plant Construction Project. The PBC carried the following borrowing terms: a 3% interest rate, a 15-year grace maturity, a 5 year grace period, a 0.2% management fee, and a 0.2% commitment fee. Then, on March 5, 2015, the Government of Indonesia signed a $373,009,532.12 subsidiary loan agreement [SLA-1261/DSMI/2015] with Perusahaan Listrik Negara (PLN) — an Indonesian state electricity distribution company — for the same project. The proceeds of the loan were to be used by PLN to partially finance an EPC contract that it signed with Sinohydro Corporation Limited in July 2013. The purpose of the project was to construct a 440MW power plant with two power generation units in Pasir Village within Pangkalan Susu District, Langkat Regency, North Sumatra Province (exact locational coordinates: 4.12071, 98.25823). Sinohydro Corporation Limited was the EPC contractor responsible for implementation. Unit 2 went online in July 2014, and Unit 1 was undergoing testing as of February 2015. However, the introduction of the power plant was delayed in February 2015, after steel was stolen from the three of the plant's transmission towers, causing them to collapse. It was unclear whether the person responsible was trying to steal and sell the metal, or trying to stop the plant from operating. The project finally entered implementation on May 4, 2015. Then, in June 2015, PLN said that Unit 1 was operating. However, as of the fourth quarter of 2016, the project had only achieved a 45.47% completion rate. Google Earth images dated May 28, 2017 show that boiler erection had begun by that date. The project was officially handed over to PLN on June 16, 2021. Extensive negative environmental and social impacts as a result of plant construction and operations have led to numerous protests since 2009. In December 2019, an investigative team was tasked by the local government to look into supposed dumping of coal into natural bodies of water.