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Asian Development Bank to provide $350 million for Sarulla project

Muara, Lake Toba, Tapanuli Utara, North Sumatra, Indonesia (source: flickr/ Max Grabert, creative commons)
Alexander Richter 31 Mar 2014

The Manila Philippines based Asian Development Bank announces details of $350 million part in the project financing for the Sarulla geothermal power project in North Sumatra, Indonesia.

Last week, it was announced that the Sarulla geothermal power project in North Sumatra has secured funding of $1.17 billion from various partners. In a release now, the Asian Development Bank (ADB) reports details on its share in the loan package.

The bank announced that it has provided a loan of $350 million for the construction of this 320 MW Sarulla geothermal power plant project.

“Under the loan package for the Sarulla Geothermal Power Development Project, the Manila-based lender said $250 million will come from its ordinary capital resources while $80 million will come from the ADB Clean Technology Fund. The remaining $20 million will be drawn from the Canadian Climate Fund for Private Sector in Asia.

The project requires a total loan package of 1.17 billion U.S. dollars. Six commercial banks will also co-finance the loan package while the ADB and the Japan Bank for International Cooperation acted as lead structuring banks.

Proponents of the project are Itochu Corp., Kyushu Electric Power Co., Ormat International, and Medco Power Indonesia.

The project will be developed and implemented under a 30-year energy sales contract with Perusahaan Listrik Negara, the national electricity utility company, a 30-year joint operating contract with Pertamina Geothermal Energy, and a 20-year guarantee from Indonesia’s Ministry of Finance.

The ADB said in a statement that its climate finance capabilities were instrumental in establishing the first commercially-financed, utility-scale geothermal independent power plant in Indonesia in more than a decade.

It added that the climate funds were structured as an ” innovative” loan tranche that bridged the financing gap between banks and investors to maintain the financial viability of the project.

The Sarulla Geothermal Power Development Project is envisioned to provide clean power to an Indonesian grid currently dominated by aging coal and oil-fired power plants. The plant is expected to reduce 1.3 million tons of carbon dioxide emissions per year upon its completion in 2018.

Source: Shanghai Daily