Deal Information

Borrower: Jakarta Tank Terminal (JTT)
Amount: US$60mn
Mandated lead arrangers: FMO (Nederlandse Financierings–Maatschappij voor Ontwikkelingslanden), ING Bank
Co-lender: DEG (Deutsche Investitions-und Entwicklungsgesellschaft)
Law firms: Allen and Overy, Addelshaw Goddard, HHP, Makes and Partners, Shook Lin and Bok
Tenor: FMO: 8 years; ING: 5 years; DEG: 8 years
Date signed: May 5, 2009

On May 5, Jakarta Tank Terminal (JTT) signed a US$60mn long-term financing agreement for the construction of the first phase of an independent petroleum storage terminal in Indonesia. The project makes a major contribution towards private sector promotion in an industry which has so far been characterised by a governmental monopoly.
The facility has been provided by development banks FMO (Nederlandse Financierings–Maatschappij voor Ontwikkelingslanden) The Netherlands, DEG (Deutsche Investitions-und Entwicklungsgesellschaft) Germany, and ING, Singapore.

FMO and ING were mandated lead arrangers for the transaction. FMO provided US$30mn with an eight-year tenor and ING provided US$15mn with a five-year maturity. Co-lender DEG’s US$15mn facility carries an eight-year tenor.

This long-term financing is highly relevant in the current financial market, where long-term dollar financing is scarce. The development impact of this project is considerable as independent petroleum storage facilities are one of the key drivers to the liberalisation of the fuel market in Indonesia. As such, it will have a positive effect on the competition within this market. The project will also create a significant number of jobs.

“The project makes a contribution to the strengthening of the private sector, a vital concern of DEG’s,” says DEG’s Victoria Brinkmann, investment manager at DEG’s manufacturing industry department, and the project manager responsible for the deal. “It is DEG’s aim to establish and expand private-sector structures in developing and emerging market countries. Besides know-how transfer, training and employment effects, the essential developmental contribution of this project lies in the enhancement of competition against the background of the liberalisation of the Indonesian oil market, since the services offered by both Jakarta Tank Terminal and its private customers are almost exclusively being offered by the governmental Pertamina oil company.”

JTT is a greenfield oil storage tank terminal project in Jakarta’s Tanjung Priok harbour. The financing will fund the construction of the first phase of the storage terminal for petroleum products, with capacity of 250,000 cubic metres.

According to Bert van der Toorn, managing director and head of natural resources, Asia, ING Wholesale Banking, the location of the terminal is unique as it is the only significant independent storage terminal located in the Jakarta region. “Competition cannot easily find space nearby and are now located 120km way in Merak. [This is] a clear disadvantage for security of supply and turnaround time and costs for the limited number of trucks – especially in Indonesia, where the infrastructure can create huge delays.”

JTT is a first-time cooperation joint venture between AKR Corporindo Tbk and Dutch Royal Vopak, the world’s largest tank terminal operator, based in Rotterdam, The Netherlands. AKR is well positioned in the Indonesian chemical and petroleum product distribution market, leading the way behind state-owned Pertamina. Royal Vopak has an international client network in the petroleum product handling and storage business. This is Vopak’s first and flagship terminal in Indonesia.

Juliette Leusink, deal team leader and investment officer at FMO, comments on the strengths of the transaction: “Together, the sponsors and therefore the project company should be able to benefit from both their global and local expertise [and the] experience and strength of their networks to make this a fruitful cooperation.”

Although no ECAs were involved in the deal, FMO and DEG are both bilateral development banks and as such are entities supported by their own states, which benefit from bilateral agreements with Indonesia. “DEG is a member of KfW Bankengruppe (KfW banking group), a promotional bank under the ownership of the Federal Republic and the Länder (federal states),” says DEG’s Brinkmann. “As part of the German development cooperation, DEG has access to local government agencies and authorities. As a political facilitator it can liaise many different contacts for partners to facilitate project implementation.”