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Thursday, June 16, 2016
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Adaro’s unit secures $3.4b financing for PLTU Batang mega project

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CEO of Adaro Energy Garibaldi Thohir (left) and CEO BPI Muhammad Effendi (right) - Photo by The Insider Stories
CEO of Adaro Energy Garibaldi Thohir (left) and CEO BPI Muhammad Effendi (right) - Photo by The Insider Stories

JAKARTA (TheInsiderStories) - PT Bhimasena Power Indonesia (BPI), the developer of giant coal-fired power plant PLTU Batang in Central Java, has secured loan from a consortium led by Japan Bank for International Corporation (JBIC) amounting to US$3.4 billion (Rp45.02 trillion) to finance the power plant.

BPI is a joint venture of three companies, namely PT Adaro Power, a subsidiary of PT Adaro Energy Tbk (IDX: ADRO), J-Power and Itochu Corp.

“We have sealed financial close on June 6. With the loan, we can now accelerate the development of the power plant project,” Garibaldi ‘Boy’ Thohir, president director of Adaro Energy told TheInsiderStories and rambuenergy.com on Wednesday (June 8).

Boy Thohir said the construction of the mega power plant, with capacity of 2×1000 MW, will last for about 48 months or in June 2020.

Mohammad Effendi, president director of BPI said of the $3.4 billion loan JBIC provided $2 billion, while the balance comes from nine international commercial banks, including Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank, DBS Bank, Sumitomo Mitsui Banking Corporation, OCBC and four others.

Effendi said the total cost or investment to develop the power plant reached $4.2 billion. The remaining funds need will come from the JV firm in the form of equity.
He said, BPI has secured coal supply from Adaro Energy and Kalimantan Prima Coal with total volume of 7.5-8 million tons of coal per annum for 25 years. The coal price will be based on market price.
PLTU Batang is part of the government’s power plant program to develop 35,000 MW of power plant within timeframe of 5 years. PLTU Batang is the first major power plant projects that have sealed financial close.
The formal signing of the financial close was supposed to be signed on Wednesday (June 8) at the office of the Coordinating Ministry for the Economy. However, the signing ceremony was delayed until tomorrow as President Joko Widodo wants the signing agreement ceremony to be made at the State Palace on June 9.
The construction of the Batang power plant previously pending on final decision of the Supreme Court on land dispute case. It will be built on 226 hectares of land covering 3 villages – Ujungnegoro, Karanggeneng and Ponowareng villages.

Currently, Adaro only one power plant has operate with capacity 2×30 MW and have other projects in the building process, PLTU Kalsel located in Tabalong Regency in South Kalimantan will have capacity of 2×100 MW. The company has signed power purchase agreement (PPA) with state electricity company PT PLN in October 2014.

PLTU Kalsel is developed by PT Tanjung Power Indonesia, a joint venture of PT Adaro Power, controlled by Adaro Energy, and Korea East West Power (EWP). The project needs around $400 million investment and in the process financial close.

In addition, to PLTU Batang and PLTU Kalsel, Adaro also is developing PLTU Kaltim with capacity of 2×300 MW in partnership with China’s Shenhua. It also currently participates in a tender for the development of Sumsel 9 and Sumsel 10 with capacity 2×600 MW joined with Mitsui Corp and Jawa 1 with capacity 2×800 MW with Sembawang Corp.

The two projects is estimating need investment around $6 billion

Thohir expects its three main business units, mining, logistic and power will have balanced contribution of 30 percent each to overall Adaro Energy’s revenues. Currently, 50 percent of the company’s revenues come from mining, followed by 30 percent logistic, 15 percent power and 5 percent others.