PT. Tanjung Power Indonesia (TPI) has secured US$560 million in debt and equity financing for the construction of a 2 x 100-megawatt coal-fired power station in South Kalimantan, the southernmost province on the island of Borneo (Indonesia).
TPI has a 25-year power purchase agreement with Indonesia’s state-owned electricity distributor, PLN, with PLN’s payment obligations being guaranteed by the Indonesian government under its Fast Track II/BVGL scheme.
The Kalsel power plant is being built by Hyundai Engineering Co. Ltd. and its Indonesian affiliate PT. Hein Global Utama, using circulating fluidized bed technology (a process designed to recapture most coal-firing emissions before they are discharged into the atmosphere).
Senior debt is being provided by The Bank of Tokyo-Mitsubishi UFJ, Ltd., DBS Bank Ltd., The Hongkong and Shanghai Banking Corporation Limited, Korea Development Bank and Korea Development Bank, Singapore Branch, Mizuho Bank, Ltd., and Sumitomo Mitsui Banking Corporation, Singapore Branch. The majority of the debt is covered by political risk insurance provided by Korea Trade Insurance Corporation (K-Sure). Equity bridge loans are being provided by BTMU, DBS, Mizuho, and SMBC.
Milbank, Tweed, Hadley & McCloy LLP has advised TPI in securing debt and equity financing for the project. Milbank's Singapore-based Global Project, Energy and Infrastructure Finance partner David Zemans stated:
“Milbank is very pleased to have assisted TPI in achieving financial close for this very important project that will help Indonesia address its electricity needs and diversify its sources of power. As the country’s economy continues to grow, and with it the demand for electrical power, Indonesia’s abundant natural resources will be key to maintaining a steady and dependable supply of electricity.”