Finland’s ECAs have opened two long-term loan facilities with PLN, Indonesia’s national electricity company.
The loans, which add up to €160mn in total, will be used to finance two gas-powered plants in the country, including the procurement of 35 Wärtsilä gas-fired generating sets.
Finnvera has guaranteed both loans, the funding for which has been provided by Finnish Export Credit, its direct-lending subsidiary. The finance was arranged by Standard Chartered.
The plants, in the Aceh region of Northern Sumatra and the Central Kalimantan region of Borneo, will be powered by LNG – a fact which is likely to see the decline in Indonesia’s exports of the commodity continue.
The country has been a large-scale exporter of LNG in the past, but in response to severe power shortages at home, has had to rebalance its gas exports portfolio. LNG exports declined by 13.8% in 2012 and last year, Standard Chartered was among the banks financing a US$310mn floating LNG terminal in Lampung, with the gas produced being transported to Jakarta.
The 184MW Aceh plant will use 19 Wärtsilä engines, to be imported from Finland. The 155MW Kalimantan plant will use 16.
Topi Vesteri, executive vice-president of Finnvera, says: “Finnvera and Finnish Export Credit are pleased to be supporting the delivery of Wärtsilä’s technology to PLN. The two projects are important deals for the Finnish company that will export the gas engines from Vaasa, Finland. The new plants will increase the power generation capacity and support development in their respective regions. Finnvera’s commitments in Indonesia have almost doubled during 2013, and we expect to see several interesting new projects in the country that offers growing opportunities for Finnish exporters.”
PLN’s president Nur Pamudji pledged to continue to bridge the gaps in Indonesia’s energy supply, saying: “PLN is committed to a programme of investment in the Indonesian power sector in order to support economic development in the country and will continue to develop its investment program to increase the capacity and reliability to provide a better service to the customers. PLN aims to reduce its reliance on fuel oil and improve its fuel mix to decrease the production cost thereby reducing the subsidy.”