KUALA LUMPUR: Societe Generale Corporate & Investment Banking (SG CIB) has closed the US$1.17bil senior project financing for the massive Sarulla geothermal project in northern Sumatra, Indonesia.
It said on Tuesday Sarulla, when completed in 2018, would be the world's largest “greenfield” geothermal power generation project.
The project involves building a 351 gross megawatt geothermal power station, commercial production of which is expected to begin in 2016.
SG CIB served as the "technical bank," coordinating both reserves and technical consultants and conducting due diligence. The bank also played a critical role in structuring the deal. The transaction achieved financial close in May 2014.
It said the project success was due to the significant power project development experience of the parties involved.
The project sponsor group - which includes Itochu Corporation, Kyushu Electric Power Company, PT Medco Power Indonesia, and Ormat International – brought significant power project development experience.
“The project team accounted for residual construction and geothermal resource risks. The Sarulla project is based on abundant and high-quality geothermal reserves in the region.
“Due to these factors Sarulla successfully attracted strong interest from banks that are keen to support green energy,” it said.
Geothermal power is expected to play an important role in Indonesia's future energy mix. Sarulla stands out for its size and it provides a continuous supply of energy, whereas most renewable energy sources entail intermittent gaps in supply.
The full lender group includes the Asian Development Bank and Japan Bank International Corporation.
The six major commercial banks involved are Societe Generale, Bank of Tokyo-Mitsubishi UFJ, ING Bank NV, Mizuho Bank, National Australia Bank and Sumitomo Mitsui Banking Corporation.
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