The Japan Bank for International Cooperation (JBIC) and the Asian Development Bank (ADB) have signed large financing packages in support of construction of the US$1.6bn Sarulla geothermal project in Indonesia.
JBIC signed a US$821mn package while the ADB signed a US$350mn deal to help build what’s expected to be the largest geothermal power plant in the world.
The JBIC package includes a direct loan of US$492mn and a syndicate of commercial bank loans, worth US$329mn, that benefit from an extended political risk guarantee from JBIC. The ADB will provide a direct loan of US$250mn and two tranches of senior debt: US$80mn from the Clean Technology Fund (CTF) and US$20mn from the Canadian Climate Fund for Private Sector in Asia (funded by the Canadian government).
The syndicate of six commercial banks acting as MLAs that make up the total US$1.17bn project financing include Bank of Tokyo-Mitsubishi UFJ, ING Bank, Mizuho Bank, Société Générale, National Australia Bank and SMBC. JBIC and ADB act as lead structuring banks.
The 320MW Sarulla plant will be developed and implemented under a 30-year energy sales contract with Perusahaan Listrik Negara (the national electricity utility), a 30-year joint operating contract with Pertamina Geothermal Energy, and a 20-year guarantee from the Indonesian ministry of finance.
The plant comprises three separate units that will use geothermal resources (steam, brine and gas) from the Namora-I-Langit and Silangkitang fields in northern Sumatra.
It is hoped the project will establish a new blue-print for the next generation of geothermal power projects in the country. It is the first greenfield geothermal power plant to achieve successful signing of limited-recourse project financing documentation since the Wayang Windu project in 1997.
Senior investment specialist in ADB’s private sector department, Jackie Surtani, says: “Geothermal power taps into an abundant indigenous resource in Indonesia that can provide a more sustainable and secure form of clean energy while significantly lowering carbon emissions.”
Approximately 40% of the global geothermal resource base is located in Indonesia. The government aims to increase the share of renewable energy in Indonesia’s main energy supply from 5% in 2010 to 25% by 2025.