China Eximbank provides seller's credit to fund China Huadian Engineering Co. Ltd's $150 million supplier credit for 130MW Tanjung Kasam Power Plant Construction Project

On August 31, 2006, PT Tanjung Kasam Power (also known as “TK Power” or “PT TJK Power”) — a project company and joint venture of PT PLN Batam (a subsidiary of the Indonesian state-owned Perusahaan Listrik Negara (PLN) and PT Petra Unggul Sejahtera (a private company) — signed an EPC contract with Dongfang Electric Corporation for the 130MW Tanjung Kasam Power Plant Construction Project. However, Dongfang Electric Corporation reportedly did not fulfill its obligations under the contract (due to an earthquake in China that damaged some of the facilities of Dongfang Electric Corporation, thereby activating the EPC contract’s force majeure clause). Then, on November 21, 2008, China Huadian Engineering Co. Ltd and PT Tanjung Kasam Power (or “TK Power” or “PT TJK Power”) signed an EPC contract and a $150 million supplier credit agreement for the 130MW Tanjung Kasam Power Plant Construction Project. PT Tanjung Kasam Power is 90% owned by PT Petra Unggul Sejahtera and 10% owned by PT PLN Batam. The proceeds from the supplier credit were to be used by the borrower (PT Tanjung Kasam Power) to partially finance the $181 million cost of the EPC contract with China Huadian Engineering Co. Ltd. The borrowing terms of the supplier credit were as follows: a 10-year maturity and a 3 year grace period. The interest rate of the supplier credit is unknown. It is known that the borrower purchased credit insurance from Sinosure. China Huadian Engineering Co. Ltd., in turn, secured an export seller’s credit from China Eximbank in order to finance the supplier credit. The purpose of the project was to install a 130-megawatt (MW) coal-fired power plant — with two 115MW generators (Unit 1 and Unit 2) — in Telaga Punggur subdistrict within Batam City, Riau Province, Sumatra Island (exact locational coordinates: 1.0441369, 104.1357136). China Huadian Engineering Co. Ltd was the EPC contractor responsible for implementation. On August 31, 2010, a formal groundbreaking ceremony was held. However, construction did not begin until March 1, 2011. The expected duration of the construction period was 28 months. However, the project was completed in 20 months (well ahead of schedule). In February 2013, the Jakarta Post reported that “[a]round 300 residents of Batam, Riau Islands, have rallied to shut down the Tanjung Kasam steam-powered electricity plant (PLTU) until state-owned electricity company PT PLN stops it from pouring ash onto their homes. The residents of Telaga Punggur subdistrict in Nongsa have complained of respiratory and skin ailments due to ash from the plant since the Tanjung Kasam PLTU started operations at the end of 2012." The residents were halted by local police as they approached plant managers on January 2, 2013 to demand the plant be shut down.

Additional details

1. This project is also known as the 2x65MW Tanjung Kasam Power Station Project or the 65MW Batam Coal-Fired Power Plant Project. The Chinese project title is 印尼巴淡岛2X55MW燃煤电站项目 or 巴淡2×65KW燃煤电站项目. 2. In the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020, it identifies the loan commitment (signature) year as 2014. However, AidData has coded the loan commitment year as 2008 based on the precise loan (supplier credit) signature date (November 21, 2008). Also, Boston University’s Global Development Policy Center identifies the borrower as the Government of Indonesia. AidData relies upon a set of official and unofficial sources that indicate the borrower is PT Tanjung Kasam Power, a project company and joint venture that is 10% owned by the Indonesian state-owned Perusahaan Listrik Negara (PLN).

Number of official sources

3

Number of total sources

18