JAKARTA (TheInsiderStories) – The Asian Development Bank (ADB) signed a private sector financing package to support the construction of a 275-megawatt combined cycle gas turbine power plant in Riau province by give loans of US$222 million, according to its released on Friday (03/22).
According to the financing firm, the funding was made to secure the Indonesia’ energy future and provide the community with more affordable and reliable electricity.
The ADB describes, the financing consists of a loan of $70 million from ordinary ADB capital resources and a loan of $82 million B from Sumitomo Mitsui Banking Corporation and MUFG Bank, with ADB providing a partial risk guarantee (PRG) to the participating commercial banks.
In addition, the International Finance Corporation (IFC) will provide $50 million for the Riau Natural Gas Project in the first joint financing of infrastructure projects by ADB and IFC in Indonesia.
Besides, the Bank will also provide worth $20 million loan from the Leading Private Sector Infrastructure Fund (LEAP), supported by the Japan International Cooperation Agency.
“ADB’ involvement in the project has helped secure long-term commercial bank financing necessary for any large-scale infrastructure investment, which has remained a challenge in Indonesia,” said Infrastructure Finance Division Director for Southeast Asia, East Asia, and the Pacific at ADB’s Private Sector Operations Department Jackie B. Surtani.
He added, that the role of ADB as a lender and PRG provider for project B loan lenders would allow the project to mobilize large amounts of long-term debt.
This project was operated through PT Medco Ratch Power Riau, a special purpose vehicle partially owned by PT Medco Power Indonesia, a leading developer and operator of small and medium-sized IPP in the country, and Ratchaburi Electricity Holding Public Company Limited, the largest IPP in Thailand.
“ADB’ role was key in getting this transaction closed from the negotiation stage of the power purchase agreement to the structuring of the financing package,” said Chief Executive Officer PT Medco Power Indonesia Eka Satria.
With this project, she is expected to be able to provide stable and reliable power to domestic networks, amounting to around 1,445 gigawatt-hours per year.
The use of a combined cycle gas-fired power plant will improve the environmental sustainability of the current energy mix in Sumatra by replacing diesel and coal as fuel for electricity generation.
In another occasion, President Director of Medco Power Riau Hartono Indriyanto, said with financial support from IFC and other financial institutions, hoped to be able to provide more environmentally friendly power supplies to meet the country’s increasing needs.
He added, the raising commercial funds and private sector expertise became increasingly important in the development of vital projects such as the Riau gas independent power producer (IPP) project.
“We are proud to be able to support MRPR, which can be an example for other projects in supporting the development of 35 MW programs in Indonesia,” he said.
Written by Daniel Deha, Email: email@example.com