ICBC contributes IDR 366 billion to syndicated loan for Cikampek-Palimanan Toll Road Development Project

On September 26, 2012, PT Lintas Marga Sedaya (LMS) — a project company and special purpose vehicle — signed an IDR 8.8 trillion syndicated loan agreement with a group of 22 banks and financial institutions (including ICBC Indonesia) for the Cikampek-Palimanan Toll Road Development Project. Members of the lending syndicate included BCA, Bank DKI, Bank Panin, Bank bjb (Bank Jabar Banten), ICBC Indonesia, Export-Import Bank of Malaysia Berhad (Mexim), Deutsche Bank Indonesia, BII (Maybank Indonesia), and Bank CIMB Niaga. The syndicated credit facility was divided into three tranches and the maximum amount of the credit facility is IDR 8,800,000 million with the first scheduled drawdown in June 2013. It carried a 15-year maturity and an estimated average interest rate of 9.86%. The loan was secured by (collateralized with) receivables, assets, escrow account, shares issued, assignment of rights agreement and a letter of undertaking from UEM Group Berhad, shareholders of the project company (PT Lintas Marga Sedaya) and Mezzanine creditors. ICBC Indonesia contributed IDR 366 billion to the syndicated loan, which carried a 15-year maturity an unknown interest rate. The IDR 12 trillion project involved the construction, ownership and operation of a 116 km toll road connecting Cikampek and Palimanan in the West Java province. It consisted of 6 sections: Section I, Cikopo–Kalijati (29.12 kilometers); Section II, Kalijati–Subang (9.56 kilometers); Section III, Subang–Cikedung (31.37 kilometers); Section IV, Cikedung–Kertajati (17.66 kilometers); Section V, Kertajati–Sumberjaya (14.51 kilometers); and Section VI, Sumberjaya–Palimanan (13.78 kilometers). Construction began on December 11, 2011. As of July 2012, 95 percent of land acquisition was achieved. However, the syndicated loan did not disburse until 100% of land acquisition was achieved. The first loan disbursement took place in September 2012. As of January 2014, the project had achieved a 15 percent physical completion rate and the toll road was expected to go into operation in late 2014 or early 2015. The toll road was ultimately opened to traffic by Indonesian President, Joko Widodo, on June 13, 2015. Within 10 days of the road being inaugurated, there were 30 car accidents that led to injuries and fatalities. Not all of the rest areas along the toll road were in operation, causing drivers to drive continuously with no rest. Another apparent reason for the car accidents was the absence of lighting facilities. The project had both environmental and social impacts. Key environmental impacts included: major changes in land use in construction areas; increased noise, erosion, dust, waste and traffic, especially during construction; and degradation of environmental quality. Social impacts included: some 5,617 Project Affected People (PAP), mainly due to land acquisition; and project alignment to accommodate 2 cultural sites (an ancestor tomb and a sacred well). To minimize these environmental and social impacts, the project agreement included a Corrective Action Plan (CAP), and the project developer (LMS) provided: i) a Supplemental Resettlement Action Plan (SRAP) Unit; ii) a Community Development Unit; iii) a Grievance Redress Unit; iv) a Stakeholder Relations Unit; and v) a budget of up to USD15 million for the livelihood restoration program and the CAP. Implementation was closely monitored through a local consulting firm. Concerning the SRAP, about 1,527 PAPs in 5 regencies registered for a Livelihood Restoration Program. The program assisted PAPs to improve their standards of living—or at least restore them to pre-displacement levels— through PAPs working on the construction works and skills training for food security, animal husbandry and running a business. In managing and delivering this Program, LMS worked with, among others, Village Heads and three NGOs. Late in the process, a satisfaction survey was conducted to measure the effectiveness of the engagement with PAPs and 87% of the surveyed PAPs found the process acceptable (versus a target of 75%).

Additional details

1. In June 2015, the name of the road changed from the Cikampek-Palimanan Toll Road (Cikapali) to the Cikopo-Palimanan Toll Road (Cipali). PT Lintas Marga Sedaya is the 35-year concession holder and operator of the Cikopo-Palimanan (Cipali) toll road in Indonesia. 2. Astra Infra, a unit of PT Astra International Tbk, holds a 45% ownership stake in PT Lintas Marga Sedaya. Canada Pension Plan Investment Board holds a 55% ownership stake in PT Lintas Marga Sedaya; it purchased this 55% stake from Malaysia’s Khazanah Nasional Berhard (Plus Expressways Berhad) in 2019. PT Astra International Tbk is a private Indonesian conglomerate controlled by Jardine Matheson. It is Southeast Asia's largest independent automotive group. 3. The average interest rates that applied to the syndicated loan are 10.76% (2018: 10.76%) for the portion of loan without Standby Letter of Credit and 8.96% (2018: 8.96%) for the portion of loan with Standby Letter of Credit. AidData has taken the average of these two interest rates to code its interest rate field (9.86%).

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8

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13