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

Project narrative

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. PT SGPJB implemented several measures to protect a mangrove forest near the site, including the installation of fences, wire mesh, and mangrove protection signs. Personnel were also designated to oversee the protection of different sections of the forest, and during the construction period, large machinery were required to take detours around the mangroves. Moreover, China Shenhua Energy Company Limited (CSECL), one of the joint venture partners, maintained that the plant was environmentally friendly due to its use of ultra supercritical (USC) technology designed to reduce the amount of carbon and waste released into the sea. However, the power plant overlaps with the traditional fishing grounds of nearby villages. Since the beginning of plant operations, waste and coal transport barges servicing the plant have caused pollution in the surrounding marine ecosystem, adversely affecting the livelihoods of fishermen, with some reporting their fish catches have been cut by half.