The funding of the Paiton I power project in Indonesia has been successfully concluded through the joint efforts of US Ex-Im Bank, Japan’s JBIC, Nippon Export and Investment Insurance (Nexi) of Japan, and Opic.
An Ex-Im US$381mn direct loan to PT Paiton Energy, JBIC financing of US$844mn, Nexi financing of insurance coverage of commercial bank financing of US$337.6mn, and an Opic guarantee of US$200mn of investment all contributed to the successful restructuring of the Paiton project. In addition, bondholders and 38 commercial banks provided US$307mn in financing
The US and Japanese trade agencies are gratified that the restructuring of the project was successfully concluded through their cooperation and that of the project, the bondholders and the commercial lenders.
PT Paiton Energy, the project company, is principally owned by Edison Mission Energy, General Electrical Capital, and Mitsui & Co Ltd.
The Paiton I plant, a 1,230MW coal-fired power plant in East Java, is Indonesia’s first and largest independent power project. The project achieved financial close in 1995 and the plant was commissioned in 1999.
In 1995, Ex-Im provided a US$540mn loan guarantee covering political risk during the construction phase of the Paiton project, which subsequently was reduced to US$507mn because of decreased funding needs. The financing agreement called for Ex-Im, at completion of project construction, to convert its guarantee to a direct loan to take out the commercial lenders subject to the satisfaction by the Paiton project of certain conditions. However, conversion of the Ex-Im guarantee to a direct loan was delayed by the Asian financial crisis. The successful restructuring of the project’s debt was completed in February this year.
In 1995, JBIC (formerly known as Jexim) provided an US$855mn export credit along with 36 commercial banks. JBIC provided US$513mn and the commercial banks provided US$342mn. As a part of the restructuring, JBIC accepted to change the repayment schedule, and to change the interest rate from a fixed rate to a floating rate.
Opic originally provided an investment guarantee of US$200mn, funded by issuance of certificates of participation. As a part of the restructuring, the original certificates were redeemed and new certificates were issued.
Nexi (formerly known as EID/Miti) originally insured Y31.806tn (about US$360mn) financed by the commercial banks in Japan for the project. Nexi will maintain the original insurance coverage for the project after the restructuring.
Ex-Im is an independent federal government agency that helps finance the sale of US exports, primarily to emerging markets, by providing loans, guarantees, and export credit insurance. In fiscal year 2002, Ex-Im authorised financing to support about US$13bn in US exports worldwide.