Medco Power 2011

completed

The proposed IFC transaction is an equity investment of up to $25 million in PT Medco Power Indonesia (“MPI” or the “Company”), an independent power producer (“IPP”) in Indonesia (“Medco Power 2011” or the “Project” or the “Investment”). The Investment is part of a $112 million equity package to be arranged by a consortium of financial investors to acquire majority of MPI and provide growth capital to MPI.MPI is currently owned 100% by PT Medco Energi Internasional tbk (“MedcoEnergi”), an oil and gas exploration company in Indonesia. In line with MedcoEnergi’s strategic re-focusing on its hydrocarbon business, MedcoEnergi has decided to invite a financial investor into MPI to facilitate its further growth in the domestic IPP market, which is poised for significant growth in response to growing electricity demand in the country.The power grids in Indonesia comprise a large, interconnected Java-Bali grid and several other smaller island grids, most of which are isolated. Given growth in electricity demand of over 9% per annum, the Indonesian power sector has struggled to meet its required investment needs over the past decade. In light of these factors, MPI has focused on developing, owning and operating small- to medium-scale IPPs tailored to smaller islands and isolated grids with unmet demand for electricity. MPI has developed six gas power projects with a total gross installed capacity of 189MW. MPI also provides Engineering, Procurement and Construction (“EPC”) and Operations and Maintenance (“O&M”) services to other power producers in the country. Given the increasing awareness of the climate change agenda in the country, MPI’s future strategy is to pursue small- to medium-IPPs in the clean energy sphere. The growth capital provided by IFC and its co-investors is to be used for: i) the expansion of MPI’s existing gas plants from simple-cycle to combined-cycle, thereby improving their efficiency; ii) developing small scale hydro projects; and iii) new gas fired power projects.