CDB provides $1.319 billion loan for 2100MW Java-7 Coal-Fired Power Plant Construction Project (Linked to Project ID#49153)

On September 29, 2016, China Development Bank and Shenhua Guohua Power Jawa Bali (PT SGPJB or 神華國華（印尼）爪哇發電有限公司 or PT Shenhua Guohua Pembangkita Jawa Bali) — a special purpose vehicle and joint venture of China Shenhua Energy (70%) and PT Pembangkit Jawa Bali (PJB) (30%) — signed a $1.319 billion loan agreement for the 2100MW Java-7 Coal-Fired Power Plant Construction Project. The borrowing terms of the loan are unknown. However, it is known that the borrower purchased a credit insurance policy from Sinosure and agreed to maintain a minimum cash balance of $85 million in a debt service reserve account (DSRA). The $1.883 billion (RMB 12 billion) project is being financed with a mix of debt (~70%) and equity (~30%) and implemented as an Independent Power Project (IPP) on a Build-Own-Operate-Transfer (BOOT) basis. PT SGPJB signed a 25-year concession agreement and a power purchase agreement with Perusahaan Listrik Negara (PLN) — an Indonesian government-owned corporation that has a monopoly on electricity distribution in Indonesia and generates the majority of the country's electrical power — to design, finance, construct and maintain the Java-7 Coal-Fired Power Plant. However, the Indonesian government did not provide a guarantee for PLN’s payment obligations under the power purchase agreement. The purpose of the project was to construct a coal-fired power plant — with two, 1050MW power generation units (Unit 1 and Unit 2) — in Desa Terate Village, Kecamatan Kramatwatu, Serang Regency, and Banten Province (exact locational coordinates: -5.9916943, 106.1008005). The cooling unit of the power plant uses seawater direct-current water supply and seawater desalination equipment from Shenhua. There are two return lines (1.6km) for the 500kV inlet and outlet lines and the π-type access to PLN grid. Shandong Electric Power Engineering Consulting Institute Corp Ltd and China Energy Engineering Group Zhejiang Thermal Power Construction Co Ltd were the EPC contractors responsible for implementation. A formal groundbreaking ceremony took place on October 5, 2017. However, satellite imagery showed that construction was already underway as of April 2016. Unit 1 began commercial operations on December 13, 2019. Unit 2 was completed in September 2020.

Additional details

1. This project is also known as the 2×1050MW Jawa-7 Coal-Fired Power Plant Construction Project. The Chinese project title is 察印尼爪哇7号项目 or 印尼爪哇7号2×1050MW燃煤发电工程. 2. In the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020, it identifies this project as being supported by a $128 million China Development Bank loan. However, this is an outlier estimate. Most sources indicate that CDB issued a loan worth approximately 70% of the total project cost of $1.883 billion. 3. PJB is a subsidiary of the Indonesian state-owned power company PT PLN. The PT SGPJB joint venture is captured in Project ID#49153. 4. One official source (http://stock.finance.sina.com.cn/hkstock/go.php/CompanyNoticeDetail/code/001088/aid/772682/.phtml) suggests that the loan's final maturity date falls 13 years after the project's completion date (September 1, 2033). As such, AidData estimates that the loan carries a 17-year maturity. This issue warrants further investigation

Number of official sources

16

Number of total sources

34