ICBC Indonesia contributes IDR 200 billion to IDR 5.9 trillion syndicated loan for Palembang Light Rail Transit (LRT) Construction Project

Project narrative

On October 31, 2017, PT Waskita Karya Tbk (Waskita Karya) — an Indonesian state-owned construction company — signed an IDR 5,990,000,000,000 syndicated loan agreement for the Palembang Light Rail Transit (LRT) Construction Project. The members of the loan syndicate included PT Bank Negara Indonesia Tbk, Bank of Tokyo-Mitsubishi UFJ, Ltd., PT Sarana Multi Infrastruktur Tbk, PT BPD South Sumatra-Bangka Belitung (Bank Sumsel Babel), PT BPD Jawa West and Banten (Bank bjb), PT Bank Panin Tbk, PT BPD Papua, ICBC Indonesia, and PT BPD Riau. ICBC Indonesia contributed IDR 200 billion. The loan carried the following borrowing terms: a 2 year maturity and an interest rate between 8.75% and 9.25% on June 30, 2017. The loan was secured by (collateralized with) receivables from the fiduciary-financed project (amounting to 100% of the contract value) and claims on project insurance. As of June 30, 2018, the loan balance amounted to IDR 41,244,574,290. The purpose of the project was to construct a light rail transit (LRT) system in the city of Palembang within South Sumatra Province that connects Sultan Mahmud Badaruddin II International Airport and Jakabaring Sport City. The LRT was to be equipped with 13 stations and 9 sub-stations and has a Musi River bridge with 350-meter river span. Waskita Karya was the contractor responsible for implementation. A groundbreaking ceremony was held in November 2015. Construction was originally scheduled for completion in February 2018. However, the completion date was late moved to June 2018 with operations beginning in July 2018, a month before the 2018 Asian Games. A test run was done on May 22, 2018 and the LRT was officially inaugurated by President Joko Widodo on July 15, 2018. While the Palembang LRT began operating in mid-2018, the project did not formally conclude until May 2019. Staff Note: The interest rate for this loan is recorded as 9%, the average between the interest rates for the two-year term: 8.75% and 9.25%.