PT Energi Sengkang

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In 1995 PT Energi Sengkang (PTES) began development of a 135 MW gas and combined-cycle power plant in Sengkang. The project consisted of a 32-km gas pipeline (from the Kampung Buru natural gas fields) which was being developed by the sponsors and the state oil company Pertamina, and a 156-kV transmission line to connect with the national grid at Soppeng, South Sulawesi. PTES was to purchase gas from Pertamina (the state oil company) under a 20 year purchase contract, and to sell electricity to PT Perseo Listrik Negara (the Indonesian state electric utility) under a 20 year power purchase agreement signed in early 1996. PTES was a joint venture of Sulawesi Energy Pty (95%) and the local firm PT Trihasra Sarana Jaya Purnama (5%). Sulawesi Energy Pty was a consortium of El Paso Energy (formally Tenneco Energy -- 47.5%) and Energy Equity of Australia (47.5%). On Dec. 18, 2001, Energy Equity formally changed its name to Energy World Corporation Ltd. In October, 2006, El Paso Corporation completed the sale of its shares in PT Energi Sengkang to Energy World Holdings (Cayman) Limited - a subsidiary of Energy World Corporation Ltd. - for US$61 million. As a result, Energy World Corporation attained a 95% interest in PTES. As of 2008, a local company - PT Medco Energi International Tbk - held the remaining 5% interest in PTES. The total project cost was US$225 million. PT Energi Sengkang secured US$178.9 million in debt financing in November 1996. Financing was to come from syndicated loans and sponsor equity. The first US$115 million debt tranche had a 90% export insurance and political risk coverage from the Swiss Export Credit Agency, Geschaftsstelle fur die Exportrisikogarantie. Construction began in 1996, with 80MW of open cycle capacity entering operation in September 1997 and 55MW of combined cycle operation commencing in September 1998. Asea Brown Boveri was the equipment supplier and the primary contractor, and was expected to operate the plant for the first six years. In May 2007, PT Energi Sengkang commenced construction works for a 60MW Siemens gas-fired turbine generator unit to be installed at the plant, which was to increase electrical output from 135 MW to 195 MW. The additional power was to be sold to PT. PLN under a long term power purchase agreement. Financial crisis of 1997 forced PT. PLN (a state-owned enterprise which is reponsible for electricity generation and distribution in Indonesia) to renegotiate the PPAs, especially with regards the price with 26 independent power producers (IPPs). In 2003, 14 of the 26 IPPs agreed to continue their projects under a new PLN proposed pricing scheme while 7 decided to terminate their PPAs. As a part of the plan, PLN gave PTES the right to add 60MW of capacity to the plant in return for a reduction in the power sales tariff. In addition, the PPA was extended until September 2022. In August 2008, Standard Chartered Bank and Mizuho Corporate Bank announced that they had closed syndication of a seven-year US$102 million financing of the project. The financial package consisted of a US$97.7 million debt package, and US$4.3 million in equity (debt to equity: 96/4). The financing was signed in October 2007 and was to mature in October 2013. The debt was split between Standard Chartered (US$48.85 million) and Mizuho Group (US$48.85 million), and arranged by KBC Bank. The rates were: +325bps floating (6 year tenor); and +150bps floating (6 year tenor) The proceeds were to refinance an existing US$60 million loan from Standard Chartered, and to provide US$44 million of new funds for the ongoing 60MW expansion of the power plant. The refinanced portion was to benefit from export credit agency cover provided by Swiss credit agency, SERV (formerly ERG), which was transferred from the original deal. The 60MW of additional capacity was commissioned on Nov. 17, 2008. On 31 July 2008, PTES received approval from the Indonesian Minister of Energy and Mineral Resources for a further 120 MW capacity expansion, increasing output from 195 MW to 315 MW. Negotiations began with PLN to amend the PPA to accommodate this increase in capacity and, potentially, to extend the period of the PPA. This expansion reached financial closure on July 15th 2011, totalling US$200 million to refinance existing loans and expand the project. The debt consisted of three tranches: US$ 105 million (7 years), equally split between SMBC, Standard Chartered, Mizuho, Natixis (US$26.25 million each). US$ 40 million (7 years), equally split between SMBC, Standard Chartered, Mizuho, and Natixis (US$10 million each). US$ 55 million (7 years), equally split between SMBC, Standard Chartered, Mizuho, and Natixis (US$13.75 million). Legal advisers were Clifford Chance (lenders), and Baker & McKenzie (lenders). In 2012, however, it was noted that PROPARCO, DEG, and FMO committed a further US$80 million to the expansion effort. It appears the debt was syndicated out further to these institutions, but this remains unconfirmed. FMO reports total investment to be US$205 million (2012), of which US31.7 million senior debt. This is the amount used below. http://medcopower.co.id/node/19