BANDUNG, September 10 (EngineeringDaily) -- Indonesian state-owned electricity giant PLN and PT Rajamandala Electric Power (REP), a private power plant developer, signed a purchase agreement to finance the construction of a hydropower plant with a capacity of 47 megawatts (MW). The project is expected to increase the capacity of the electricity supply in the Java-Bali network and increase the contribution of renewable energy.
PLN President Director Nur Pamudji said the financing of the project will be carried out using the International Project Financing scheme, through syndication with the Japanese Bank for International Cooperation (JBIC) and Mizuho Bank Tokyo, with a loan period of 19 years.
This particular project features a key difference in financing from previous electricity projects. "Loans to finance the Rajamandala project will be implemented without any ‘feasibility assurance’ from the government of Indonesia. This is a significant achievement for the construction of power plants in Indonesia," Pamudji said.
According to the President Director, the change indicates an improvement in the confidence level of lenders to electricity businesses in Indonesia. Initially, construction projects required direct government involvement to ensure receipt of funds, but now that involvement is no longer necessary.
"The hope is that this method can be used for other future electrical projects, so the improvement of our country’s electricity network can proceed more quickly," Pamudji explained.
The Rajamandala hydropower development will cost approximately USD 150 million in total. Lenders will finance 75% of the budget, while the remaining 25% will be covered by shareholder equity from two companies, Putra Indotenaga, responsible for 51%, and KPIC Netherlands for 49%.
"This financing scheme is being used for a project with a budget around USD 200 million, but in the future may also possibly be used for projects on a much larger scale," said Pamudji.
The Rajamandala hydroelectric project is located near the Citarum River in the Cianjur Regency of West Java Province. It will generate electricity with an average of 181 Giga-Watt hours (GWh) per year, equivalent to the electricity generated by 70 million liters of fuel oil. The construction period for the plant is estimated at 33 months, and is scheduled to begin commercial operations in May 2017.
By Ismail Al Anshori
