The proposal comprises a loan of $80 million from IFC’s own account while the remaining will be raised through B loans and syndicated and parallel loans. The proceeds will be used to provide BDSN with long-term debt and a sustainable capital structure.
BDSN owns Asahan 1, a 180 MW run-of-river hydroelectric power plant located in Indonesia’s North Sumatera province. Operational since January 2011, the plant sells electricity to Indonesia’s state-owned electric utility firm PT Perusahaan Listrik Negara (PLN).
In its disclosure, IFC said that Asahan 1 is currently one of the lowest cost power producers in the region and that its financing will have a positive effect on the average cost of power generation in North Sumatera. “The financing will allow the sponsor to invest in greenfield hydropower plants in the pipeline, thus contributing to increased share of renewables and associated reduction in CO2 emission in Indonesia,” it added.
BDSN’s largest shareholders are Singapore’s Fareast Green Energy and Pembangkitan Jawa-Bali (PJB), a subsidiary of PLN.
Prior to the latest financing, IFC had provided a $280-million loan facility to BDSN to support the long-term operation of Asahan 1 in 2014. It was joined by PT Indonesia Infrastructure Finance, which acted as a parallel-loan lender. Syndicated-loan lenders for the project included Korea Development Bank (KDB), Maybank International Labuan Branch, Natixis Singapore Branch, Societe Generale, and Sumitomo Mitsui Banking Corporation.
Demand for electricity in Indonesia, the world’s fourth-most-populous country, is projected to grow at around 8.5 per cent per annum between 2015 and 2025, according to PLN. To meet that demand, the government has outlined a plan to add 35,000 megawatts (MW) of new power generation capacity between 2015-2019.
As of May 2017, IFC has a committed portfolio of $2.1 billion in Indonesia and has reached $7.7 billion of IFC’s investments including funds mobilized in Indonesia.