Indonesian independent power producer receives financing from IFC

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Indonesian independent power producer receives financing from IFC

The International Finance Corporation (World Bank) has acquired a minority equity stake in and provided a $280 million loan facility to Indonesian independent power producer PT Bajradaya Sentranusa (BDSN).

The deal will support the long-term operation of Asahan 1, a 180-megawatt hydroelectric power plant in North Sumatra province to provide low-cost, renewable, and dependable power in a country that is often hit by power outages.

Asahan 1 Hydroelectric Power Plant 2 x 90 MW project is a run-of-river hydroelectric power project. The project uses the existing flow of Asahan River to produce electricity and it has no large scale dam or reservoir build for the project, as it is a run-of-river hydroelectric power plant. The project takes advantage of Asahan River flow that receives water from its natural source, Lake Toba.

Geographically, the project is located downstream of Lake Toba and upstream of the existing Asahan 2 (Siguragura) hydroelectric power plant, a large dam power plant built in 19811.

The financing agreements, which comprise IFC loans of $75 million as well as syndicated and parallel loans of $205 million, aim to bolster BDSN’s financial sustainability and reduce Indonesia’s reliance on traditional fuel sources. The parallel-loan lender is PT Indonesia Infrastructure Finance, a private financing institution, while the syndicated-loan lenders are KDB (Korea Development Bank), Maybank International Labuan Branch, Natixis Singapore Branch, Societe Generale, and Sumitomo Mitsui Banking Corporation.

Adek Julianwar, President Director of BDSN, said:

“With this strategic and financial support from IFC and other lenders, we look forward to providing more affordable and environmentally friendly hydropower energy to meet our country’s growing electricity needs.”

More than a quarter of Indonesia’s growing population is not connected to the national grid, leaving about 66 million people without access to electricity; the Sumatra grid suffers the longest blackouts among all of the country’s regional grids. Sixty percent of Indonesia’s electricity supply in 2012 came from coal and oil, both of which are polluting fuels that produce high carbon emissions.

The investment in BDSN is part of IFC’s strategy of building long-term partnerships in renewable-energy sectors that power development. Asahan 1, which is powered by the river’s natural flow, has been providing reliable power at a low cost since it started operating in January 2011 and is now a cornerstone of the country’s regional electricity grid. Estimated savings from BDSN’s power generation is up to $250 million per year based on the marginal cost of production in the North Sumatra grid of around 30 U.S. cents per kilowatt hour using diesel fuel.

IFC Indonesia Country Manager Sarvesh Suri said:

“We are committed to supporting private sector companies like BDSN to provide low-cost renewable energy that will improve the stability of Indonesia’s electricity supply. Affordable hydropower will help Indonesia meet its growing demand for reliable power to support development.”

BDSN’s principal shareholders are Singapore-based Fareast Green Energy Pte. Ltd. and PT Pembangkitan Jawa Bali (PJB), a subsidiary of PT PLN (Persero), Indonesia’s state-owned electric utility company and a key stakeholder in BDSN since its inception.

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