Sarulla Geothermal Project

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In May 2014 Sarulla Geothermal project reached financial closure, as the debt financing became secured. This BOO project involved the development of the 330MW Sarulla geothermal power plant in Tapanuli Utara, North Sumatra, Indonesia. The project comprised three 110MW units, which would be constructed in three phases, with each phase consisting of 110MW. It was part of the Fast Track Program 2 initiated by the Indonesian government for 10,000MW electricity development program. The SPV of the project was Sarulla Operations LTD (SOL) and the sponsor was the consortium consisting of Itochu Corp (25%), PT Medco Energi International (37.25%), Kyushu Electric (25%) and Ormat Technologies (12.75%). The equity invested by the sponsors amounted to $350.38 million. The debt amount of $1190.1 million was provided by commercial lenders and development banks. The debt financing carried a tenor of 20 years and comprised 1)a $250 million loan from the Asian Development Bank (ADB) at a 20 year maturity; a $80 million mezzanine loan from the ADB-administered Clean Technology Fund; a $20 million mezzanine loan from the Canadian Climate Fund for Private Sector Investment; a $490 million loan from the Japan Bank for International Cooperation (JBIC); a $330 million loan from six commercial banks. The six commercial banks on the deal were ING, Mizuho (insurance bank, intercreditor facility and security agent), MUFJ (documentation bank), NAB (environmental bank), SMBC (modeling bank) and Societe Generale (technical bank). The commercial bank facility was priced at 210bp over Libor for years one to four, 180bp for years four to 10, 220bp for years 10 to 15, and 250bp for years 15 to 20. The average debt service coverage ratio (DSCR) under the base case was 1.38x. Sweeps of excess cash take place in the event that the DSCR dips below 1.25x. The financing was rounded off with $350 million in equity and $80 million in pre-operating revenue. The sponsors were unable to receive any dividend payments until all three units were completed, even though they would start receiving revenues from the project before the third phase become complete, so revenue from earlier phases would help fund construction. The project consisted of three phases of 110MW, with the first phase due to come online in 2016, the second phase in 2017 and the final phase in 2018. PLN was the offtaker under a 30-year energy sales contract priced at $0.0679 per KwH.