ANNOUNCEMENT 14 Nov 2017
On 14 November 2017, the Japan Bank for International Cooperation (JBIC) issued a press release announcing signing a loan agreement with PT. Cirebon Energi Prasarana in project financing.
NUMBER OF INTERVENTIONS
The Japan Bank for International Cooperation, press release of 14 November 2017, Project Finance for Expansion of Cirebon Coal-fired Power Plant in Indonesia: http://www.jbic.go.jp/en/information/press/press-2017/1114-58534
JBIC information on overseas investment loans: http://www.jbic.go.jp/en/finance/investment
The loan agreement between JBIC and Indonesian PT. Cirebon Energi Prasarana was signed on 18 April 2017 and has an approximate value of USD 731 million in project financing. According to JBIC, the loan is co-financed by a number of private financial institutions and the Export-Import Bank of Korea, see related state act. The total co-financing amount is approximately USD 1.74 billion. The governmental agency Nippon Export and Investment Insurance will provide an insurance for the private financial institutions' co-financed portion. The Japanese companies Marubeni Corporation and JERA Co., Inc. has among others invested in the Indonesian company.
The loan finances the construction, ownership and operation of an ultra-supercritical coal-fired power plant in Indonesia. The electricity produced will be sold to Indonesian PT. PLN (Persero) for a 25 year period.
In this context, the Bank stated: "This loan offers financial support to an overseas infrastructure project in which Japanese companies are participating as investors to engage in long-term operation and management utilizing Japan's advanced technology. This loan is also intended to contribute to maintaining and increasing the international competitiveness of Japanese industries."
Overseas investment loans
JBIC provides direct loans named overseas investment loans to Japanese companies, overseas affiliates or joint ventures where Japanese companies hold equity interests and governments or financial institutions partying with such overseas affiliates. Loans support projects in specific sectors or with a specific purpose of interest to Japan. Further information can be found on the Bank’s website under overseas investment loans.
Project financing loans include preferential terms such as repayments being solely made from the project’s cash-flow generation and secured on the basis of the project's assets alone. As such the loan agreement is tied to the project's finances and not the company in question.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets and from foreign subsidiaries.