PPA MODEL FOR PPP PROJECT

PPA MODEL FOR PPP PROJECT Workshop - MKI

Assistia Semiawan – PT PLN (Persero)) Jakarta – July 17, 2012

Risk Allocation  IPP Procurement Process  Financing  Government Guarantee 

Construction of PPA template

PLN

PLN

IPP Structure & Risk Allocation

General Structure of IPP Project Contractors and Suppliers (EPC, O&M, Fuel)

PLN GOI

PPA IPP Project Co Equity

Project Sponsor

Gov. Guarantee

Debt Lenders

IPP vs EPC Project Structure PLN GOI PPA

Contract ors and Supplier s (EPC, O&M, Fuel)

GOI IPP Project Company

Equity

Debt

Project Sponso r

Guarantee

Guarantee /Recourse Contractors and Suppliers (EPC, O&M, Fuel)

PLN Debt

Lenders Lenders

Proyek IPP

Proyek EPC PLN

• IPP project : Construction risk dan financing risk will be handled by IPP • EPC project : Construction risk and financing risk will be handled by PLN

5

RISK ALLOCATION FOR IPP PROJECT Risk

PLN

IPP

Land Aq.

V

Environmental & Social Issues

V

Fuel Supply V

O and M

V

Exchange Rate

V

Inflation

V

Financing and Interest Rate V

Regulatory

V

 Risk is allocated to Party that has the capacity and capability to handle risk more efficiently than the other Party  *) Procurement Risk : IPP Fuel Price Risk : IPP

V

Demand

Force Majeure

Share

V *)

Construction

PLN

V 6

Risk Identification Specific to Mine Mouth Site Risk

Risk Tree

Power Plant Site (land acquisition, resettlement , etc) Coal Mine Site

License, AMDAL, other permits

Design and Construction Risk

Power Plant

Geological research failure

Operation Risk

Power Plant Operation

Sponsor Risk*1 Financial Risk*2

Coal supply and processing facility

Coal Supply and Processing Operation

Coal price hike (cost hike) Coal mine operation failure

Revenue Risk*3 Coal processing ops failure

Connectivity Risk Political Risk*4 Regulatory Risk

General changes in law

Coal mine bankruptcy/owner shift Dispute with mine owner (e.g. shift to export) Coal transaction price related

Force Majeure

Specific changes affecting mine mouth

Coal tax, royalty related

*1:poor sub-contractor performance, early termination ,etc. *2:inflation, FX, interest rate, etc. *3: end-user tariff adjustment, end-user nonpayment, *4: currency inconvertibility, currency transfer, expropriation, - adopted from JICA Study on Mine mouth Project

7

PLN

History of IPP Mgt & Procurement Process

KRONOLGI

PENGELOLAAN IPP

Menyesuaikan dengan dinamika perubahan IPP GENERASI I

IPP GENERASI II

IPP GENERASI III

Opsi I: PPP

PPA AWAL Ex. 27 IPP

Renegosiasi Generasi I

IPP DOMESTIK

IPP INFRASTRUKTUR

(Jaminan Pemerintah) Opsi II: PPA “B to B”

1999 - 2003

1992 - 98 EVALUASI MASALAH

2004 – 06 MEYAKINKAN PASAR DENGAN ANAK-ANAK PERUSAHAAN PLN

2005- 07

2009 Bankabie PPA PLTU Jawa Tengah RENCANA JAMINAN PEMERINTAH

Tahun 1992 – 97 : Tahun 1997 : Tahun 1999 – 03 : Tahun 1998 – 2005: Tahun 2004 – 06 : Tahun 2006 – 08 :

Generasi I, alokasi risiko kepada PLN dan ada Government Support Penangguhan dan pengkajian kembali proyek-proyek listrik swasta Renegosiasi 27 IPP Tidak ada pembangkit IPP yang baru Program kemitraan, skema “B to B”, tanpa jaminan Pemerintah Generasi II, risks sharing, skema “B to B”, tanpa jaminan Pem.

PROSES BISNIS PANJANG DAN RISIKO TINGGI 1) PLN umumkan Prakualifikasi IPP

Pengembang check Lokasi & Studi Awal

Pengembang menyiapkan data kemampuan & Bentuk Konsorsium

Pengembang jajaki Lahan, EPC Contractor, Lender, dll

PLN PLN umumkan hasil prakualifikasi

Pengembang Ajukan usulan Harga

PLN umumkan pengadaan IPP

Risiko-risiko:  Kenaikan biaya konstruksi  Kenaikan nilai tukar Rp, USD, JPY, RMB dll  Risiko politik  dll

Pengembang melakukan Feasibility Study, AMDAL, bebaskan tanah, cari EPC Contractor, Cari Lender.

Pengembang menyiapkan dokumen, Garansi dll untuk PPA

PLN umumkan pemenang Pengadaan & klarifikasi

PLN & Pengembang ttd PPA

7 – 9 bulan

12 bulan

36 - 54 bulan

Lender melakukan Due diligence

Bank mencairkan Pendanaan / Financial Close

Proyek Dibangun

IPP beroperasi

CJIPP Tender Process (1)

Legal Basis  CJIPP tender process is based on PPP Law  According to RFP: PPP Law is Presidential Regulation 67/2005 as amended by Perpres 13/2010, including its Appendix

CJIPP (1) – Project Preparation and PQ Process Start

PQ Result: 

GOI announcement in IICE 2006

Inclusion of CJIPP in RUPTL 2007-2016

(November 2006)

Nine qualified Lead Members under seven bid consortiums:

◦ China Shenhua

Article 7(1) (March 2008)

◦ Yudean Corp., ◦ J Power and GDF-Suez

CJIPP Discussion Forum (Market Sounding)

Article 8 (February 5, 2009)

◦ KEPCO ◦ Marubeni ◦ Mitsubishi

PQ Announcement

PQ Meeting

Article B.2 (June 22, 2009)

(July 2 2009)

PQ Date and Evaluation

Article B.2 (July 28 – Nov 4, 2009)

Notification of PQ Result

Article B.2 (Nov 5, 2009)

A

◦ Mitsui and International Power

B

Note: Article X.X.X.X refers to the Appendix of the PPP Law (Date refers to completed or scheduled proceedings)

CJIPP (2) – RFP and Negotiation Process B

A

Yes

RFP

Article B.4 (Feb 25, 2010)

Pre-Bid Conference

Article B.5 (Mar 25, 2010)

FS and Government Support Proposal to MOF

(July 16, 2009)

Presentation, Term Sheet ,and Draft Guarantee Agreement

(April 14, 2010)

Negotiation of RFP / Project Agreements

(Mar 25, 2010 – Mar 25, 2011)

Negotiation of Guarantee Agreement

Amendment of RFP / Project Agreements

20 Amendments

Amendment of Guarantee Agreement

Yes

Any Material Concerns None Final Project Agreements and amendment

C

Any Material Concerns

Bid Negotiation: 

In CJIPP, bid negotiation is conducted prior to bid date, creating an open, fair, and competitive process



After finalization of RFP, Project Agreements and Guarantee Agreement, no material changes (changes in risk allocations) is allowed

None (April 20, 2011)

CJIPP (3) – Evaluation of Bids C Final RFP, Project Agreements and Amendment

Note: Article X.X.X.X refers to the Appendix of the PPP Law (Date refers to completed or scheduled proceedings)

Article B.6 (April 29, 2011)

Bid Submission

Evaluation of Administrative and Technical Proposal (Envelope I)

@

Article B.5 (April 20, 2011)

Article B.7 (April 29 – May 23, 2011)

Comply with RFP? Yes

No (May 24, 2011)

Responsive Bidders >1?

No (May 24, 2011)

Return Unopened Envelope II and Proposal Security

(May 24 – June 8, 2011)

Yes Evaluation of Financial Proposal (Envelope II)

Rankings of Preferred Bidders

Article B.8

Article B.8.c.6 Article B.9

Evaluation of Financial Proposal (Envelope II)

Single Responsive Bidder

D

Article B.8 (May 24, 2011)

Article B.8.c.6 (May 24, 2011) Article B.10

CJIPP (4) – Appointment of Bid Winner D Article B.10.b (May 31, 2011)

Report to CEO of PLN

No Negotiation

Retender

Article B.10.d.7

Yes Article B.10.c (May 31, 2011)

Negotiation with Single Bidder

Article B.10.d.8 (May 31, 2011)

PLN’s CEO determine Single Bidder

Article B.10.d.10 (June 1, 2011)

Announcement of Single Bidder Objection

Evaluation and Response to Objection

Issuance of LOI to the Single Bidder

Announcement to All Bidders End

Article B.11 (June 1, 2011) Article B.12 (June 1 - 10, 2011)

(June 10 - 16, 2011)

Article B.14.a (June 17, 2011)

Section 26 of RFP (June 17, 2011)

Note: Article X.X.X.X refers to the Appendix of the PPP Law (Date refers to completed or scheduled proceedings)

Procurement Processes For IPP Projects With PPP Scheme Pre FS review and preparation of GAP Appointment of Consultants PPP scheme determined

Draft Submission RFP EOI and PQ of GAP released process

Pre-FS Finalisation

Award & Bid Signing Final One on Submission & RFP one Evaluation meetings released

Structuring Appraisal

Issuance of In-Principle Approval

Screening

Consultation

IIGF Guarantee Provision Process

Signing of: 1. Power Purchase Agreement 2. Guarantee Agreement 3. Recourse Agreement 16

PLN

Financing

PLN

Debt and Equity Requirement Project Size (MW)

Project Cost ($ million)

Equity ($ million) (25%)

Debt ($ million) (75%)

1600

2,400

600

1,800

2000

3,000

750

2,250

A 2000 MW project will require at least $2 billion debt financing  At any size, the project would classify as large project financing for developing country, requiring high quality investors  Shortlisted lead investors (equity interest of more than 20%):  In IPP project with international sponsor, domestic banks is less likely to participate in large project financing 

18 18

Financing Plan

PLN

Traditionally, and given the current state of credit markets, commercial banks would limit participation in B loans only  Central Java IPP would be heavily reliant on ECAs financing  Potential lenders include: ◦ Multilateral lenders (e.g. ADB, IFC, MIGA, IDB) ◦ B loans under multilateral cover from commercial banks ◦ Export Credit Agencies (e.g. JBIC, KEXIM, Sinosure) ◦ Bilateral financial institutions (e.g. JBIC) 

1600 MW

2000 MW

$1.8 b

$2.25 b

Multilateral 1

$ 250 m

$ 250 m

Project limit

Multilateral 2

$ 200 m

$ 200 m

Project limit

B loans under multilateral cover

$ 200 m

$ 200 m

$ 1,150 m

$1,150 m

0

$ 450 m

Debt requirement

Export Credit Agencies Bilateral

Note

19 19

PLN

Why ECA or Bilateral or Multilateral? 









Large debt financing will definitely require ECA participation – ECAs are allowed to cover a majority of eligible capital costs and can provide loans or loan guarantees of over $1 billion each Multilaterals and commercial banks are not capable of meeting this size of financing by themselves (current underwriting limit for a bank is $75 m; for multilaterals (eg. ADB) it is $250m for Indonesia) Commercial banks will not lend to an IPP in Indonesia (or similar countries) on “un-covered” basis – i.e., without an ECA, multilateral or bilateral cover All large IPPs in Indonesia have used ECA/bilateral financing (eg US Exim, OPIC, JBIC, KEXIM) – none to date have done without Even Middle East IPPs (which have A rated offtakers and gov support) have used ECA/multilateral/bilateral cover for most of the international commercial bank tranches

20

20

PLN

Government Guarantee

Kebutuhan Jaminan Pemerintah Semua proyek IPP besar di Indonesia menggunakan ECA/bilateral financing (mis: USPLN Exim, HERMES, JBIC, KEXIM)  Pembiayaan internasional ECA/bilateral mensyaratkan adanya sovereign guarantee  Pihak investor (project sponsor) meminta adanya sovereign guarantee untuk melindungi investasi mereka (dalam hal political force majeure dan PLN’s default) 

Jaminan pemerintah perlu untuk melindungi dari: Risiko Politik Perceived political risk Indonesia masih tinggi:  OECD’s Indonesia political risk rating: 5 (bandingkan Vietnam, 4)  Euromoney ranking: 85 (dari lebih 100 negara)  Institutional Investor ranking: 76 (Bandingkan India, 58)

Risiko PLN’s Default PLN credit risk masih tinggi:  Sub-investment grade rating (SP: BB, Moodys: Ba2)  Ketergantungan pada subsidi pemerintah  TDL masih dibawah nilai keekonomian dan diputuskan secara politik oleh Pemerintah/DPR Berdampak pada kemampuan PLN untuk membayar tarif PPA

KRONOLOGI IPP GENERASI I

JAMINAN / DUKUNGAN IPP GENERASI II

IPP GENERASI III

Opsi I: PPP

PPA AWAL Ex. 27 IPP

Renegosiasi Generasi I

IPP DOMESTIK

IPP INFRASTRUKTUR

(Jaminan Pemerintah) Opsi II: PPA “B to B”

1999 - 2003

1992 - 98

2004 – 06

2005- 07

2009 Bankabie PPA PLTU Jawa Tengah

Jaminan / Support

Tidak ada Jaminan

Jaminan

 Perpres 4/2010 (Jaminan Kelayakan Usaha PLN)

 Perpres 67/2005 jo 13/2010

Road Map of Guarantees for Indonesia’ IPPs (PPRFpresentation – April 2010)

Policy shifting toward better guarantee management . .. Support Letter

Confirmation Note

Guarantee Agreement

1

Addressee

Project Company

• Lender (JBIC)* • Insurer (NEXI)**

Project Company

2

Coverage

Not stated

Not stated

Financial obligations of contracting agency as stated in PPA

3

Issuer

Ministry of Finance signed by Minister

Ministry of Finance signed by Head of Fiscal Policy Office

• Indonesia Infrastructure Guarantee Fund (IIGF); and/or • Third party (MDA); and/or • GoI.

*) Under Umbrella Note of Mutual Understanding between the Ministry of Finance of the Government of Republic of Indonesia and Japan Bank for International Cooperation (JBIC); **) Under the Umbrella Note of Mutual Understanding between the Ministry of Finance of the Government of Republic of Indonesia and Nippon Export and Investment Insurance (NEXI).

Legal Framework for PPP *PPP Structure & Procurement Procedures *Guarantee Scheme

PPP Structure & Procurement Scheme Presidential Regulation no. 67/2005 on Government Cooperation with Business Entities in the Provision of Infrastructure • contains the main provisions regulating public procurement and concession projects

Presidential Regulation no. 13/2010 on 1st Amendment to Presidential Regulation no. 67/2005 • Revision on Government Guarantee • Revision on main provisions • Revision on Pre Qualification Procedure • etc

Presidential Regulation no. 56/2011 on 2nd Amendment to Presidential Regulation no. 67/2005 • Revision on Pre Qualification Procedure • Revision on Unsolicited Projects • etc

Government Guarantee Scheme through IIGF (Indonesia Infrastructure Guarantee Fund) Presidential Regulation no. 78/2005 on Guarantee of Infrastructure Projects for Government with Business Entities Cooperation Through Infrastructure Guarantee Fund - contains the main provisions regulating the establishment of IIGF (Indonesia Infrastructure Guarantee Fund)

Ministry of Finance Regulation no. 260/PMK.011/2010 on Guidance for Guarantee of Infrastructure Projects for Government with Business Entities Cooperation

25

Skema Penjaminan Proyek KPS Counter Guarantee

6

Penanggung Jawab Proyek Kerjasama (PJPK)

Kemenkeu Single Window 1 Policy 5

Perjanjian Regres

PT. PII

Cooperation Agreement

MDA Risk Sharing

4

Perjanjian Penjaminan

2

3

acessoir

Backstop Facility

Project Company Ekuitas

Sponsor

Pinjaman

Lender

Perjanjian Kerjasama

PLN

Penjaminan Infrastruktur dilaksanakan oleh Menteri Keuangan melalui Badan Usaha Penjaminan Infrastruktur (dhi. PT Penjaminan Infrastruktur Indonesia) dengan Single Window Policy 2. PJPK dan Project Company akan bersepakat untuk melakukan kerjasama dalam penyediaan infrastruktur yang dituangkan dalam Perjanjian Kerjasama yang antara lain memuat hak, dan kewajiban dari masing-masing pihak 3. PT PII akan menjamin kewajiban – kewajiban PJPK kepada project company yang dituangkan dalam perjanjian penjaminan 4. Atas penjaminan yang diberikan kepada PJPK, PT PII memiliki hak regres apabila timbul klaim dari project company 5. Dalam rangka meningkatkan kredibilitas penjaminannya, PT PII melakukan kerjasama dengan Multilateral Development Agency (MDA) ataupun pihak lainnya 6. Dalam hal diperlukan, Menteri Keuangan akan memberikan counter guarantee guna mendukung kerjasama PT PII 1.

26

Contractual Structure PLN 3

PLN 1

Sponsors / Shareholders

6

4

PPA (Cooperation Agreement)

ECP Contractor

and/or

MOF 2

PPP Co.

Sponsor Agreement/ Shareholders Agreement

EPC Agreements

IIGF

Recourse agreement

7

Fuel Supply Agreement

Fuel Supplier

5

Guarantee Agreement

Loan Agreement

8

Lenders

O&M Agreements

O&M Contractor

27

FINANCIAL OBLIGATION CLAUSE CLAUSE

EXPOSURE

Clause 4.4 Delays caused by PLN in Construction Phase

Price Adjustment

Clause 5.7.1(c) Tax imposed as result of the Special Facilities transfer

(PPN 10% from transfer price)

PLN

PLN

Clause 8.1.1 Payment during commissioning each Unit

Clause 8.1.2 Payment from Unit COD until the Project COD for Unit one

Clause 8.1.3 Payment from Project COD until termination of Agreement

PLN

Clause 8.2.1 Payment for Deemed Commissioning Clause 8.3 Supplemental Payment for Emergency Output

Clause 14.3.3 Payment for Deemed Dispatched Political Force Majeure

PLN

Clause 14.4.1 Payment for Deemed Dispatched caused by Force Majeure affect PLN Clause 15.1 Consequences in Triggering Event Clause 16.3.4 Project Purchase caused by PLN Event of Default and/or Political Force Majeure before Project COD

PLN

Clause 16.3.5 Project Purchase caused by PLN Event of Force Majeure before Project COD

Clause 16.3.6 Project Purchase caused by Political Force Majeure affect Seller and PLN and/or Event of Force Majeure affect PLN after Project COD

33

TIMELINE PPA

Financing

Date

Plant Construction period

Project COD

Termination Agreement & Transfer Project

PPA signing Unit COD (___ month)

Financing Period (12 month)

Commissioning period ----days

Operation period (25 years)

Pokok-Pokok PPA (1) No.

Subyek

PPA

1

Sifat PPA

Take-or-pay PPA, dengan opsi untuk membeli proyek pada akhir masa kontrak. Walaupun IPP mempunyai take-or-pay PPA contract, risiko off-taker PLN masih ada (non-payment risk, political risk)

2

Periode PPA

+ /- 25 tahun, tidak termasuk masa satu tahun untuk pencapaian financial close dan untuk pekerjaan konstruksi

3

Availability Factor

+ 80%, setelah Project COD + 50%, setelah Unit COD

4

PPA Tariff

Dalam rupiah, terdiri dari 5 komponen A: capital cost recovery B: biaya tetap O&M C: biaya bahan bakar D: biaya variabel O&M E: capital cost recovery untuk Special Facilities (jaringan transmisi dan GITET)

5

Project security

Escrow account sesudah PPA signing Bank Guarantee saat PPA signing Bank Guarantee II saat financial close

34

PLN

Pokok-Pokok PPA (2) No.

Subyek

PPA

6

Pasokan batubara

Pengadaan oleh IPP dengan persetujuan PLN Harga batubara di-pass-through ke PLN

7

Liquidated damage

Denda keterlambatan COD di-cap

8

Grace period on FM

2 + 7 hari (selama operasi) 48 jam (untuk net dependable capacity test)

9

Pengadaan lahan

Dilakukan oleh IPP, PLN membantu koordinasi dan sosialisasi dengan masyarakat dan pemerintah daerah

10

Deemed Commissioning

Natural FM pada PLN atau political FM pada IPP dan PLN yang mengganggu commissioning diperlakukan sebagai deemed commissioning

11

Deemed Dispatch

Natural FM pada PLN atau political FM pada IPP dan PLN yang menggangu operasi diperlakukan sebagai deemed dispatch

12

Termination Right

PLN Event of default dan prolonged political FM memberikan IPP Termination Right. Rumus: net present value dari pembayaran komponen A dan E plus outstanding debt and interest plus EPC termination cost

35

PLN

PLN

Adaptation of PPA

37

Claim and Payment Procedure for Non-Payment Default

*Subject to GA scheme

Remedial Notice cc to IIGF Claim Due/Payable

Applicable Cure Period 45 days

Consultation phase

30 Days Guarantee Payment

Termination Notice II

PPA 30 Days

Remedial Program 30 Days

____ Days *

Transfer Project *

Termination Notice 1

45 Days 1. PLN notify unability; or 2. PLN disputes amount.

Guarantee Demand

60 Days

Payment by IIGF

Determination Date

GA IIGF copied received remedial notice

Deemed no dispute

Verification Period 60 Days

18 Months

Payment by GoI

38

Claim and Payment Procedure for Payment Default*Subject to GA scheme Remedial Notice cc to IIGF Claim Due/Payable

Applicable Cure Period 45 days Guarantee Payment

PPA ___ Days *

Remedial Program 30 Days Guarantee Demand

45 Days 1. PLN notify unability; or 2. PLN disputes amount.

Guarantee Demand

60 Days Determination Date

GA IIGF copied received remedial notice

Deemed no dispute

Verification Period 60 Days

18 Months

Payment by IIGF

Payment by GoI

RECITALS This Project was procured, conducted and based on Presidential Decree No. 67 of 2005 jo. No. 13 of 2010 concerning Government Cooperation with Entity in Infrastructure Provision (Peraturan Presiden No. 67 Tahun 2005 jo. No. 13 Tahun 2010 tentang Kerjasama Pemerintah dengan Badan Usaha dalam Penyediaan Infrastructure)

CHANGE IN PPA

PLN

PLN

Clause 16.3.4 -- In the event of termination of this Agreement after the Financing Date pursuant to Section 16.1.4 due to a PLN Event of Default or pursuant to Section 16.2.4(a), PLN shall purchase the Project at the purchase price determined in accordance with paragraph 2.2 of Appendix F with reference to Claim Procedure and Payment Mechanism under Guarantee Agreement. Clause 16.3.5 -- In the event of termination of this Agreement after the Financing Date pursuant to Section 16.2.4(b), PLN shall purchase the Project at the purchase price determined in accordance with paragraph 2.2 of Appendix F with reference to Claim Procedure and Payment Mechanism under Guarantee Agreement. Clause 16.3.6 -- In the event of termination of this Agreement pursuant to Section 16.2.3(b) or Section 16.2.3(c), PLN shall purchase the Project at the purchase price determined in accordance with paragraph 2.2.2 of Appendix F with reference to Claim Procedure and Payment Mechanism under Guarantee Agreement.

CLAUSE 16.3

PLN

GUARANTEE AGREEMENT

DEVELOPER

POWER PURCHASE AGREEMENT

GUARANTOR (IIGF &GoI)

RECOURSE AGREEMENT

PLN

Guarantee Scheme



Legal Basis

◦ Presidential Regulation No. 78 / 2010 ◦ Regulation of Finance Minister No. 260/2010

 

Parties : PLN – IIGF and PLN – GoI Aim : enable IIGF/GoI as Guarantor to claim from PLN payments made by them under the Guarantee Agreement (GA)

Heads of Terms

PLN

43

Claim & Payment Procedure

PLN Demand from Seller

REGRES

Claim Due/Payable

Payment by IIGF & GoI PLN confirm

Determination Date PLN doesn't confirm Verification Payment Period Period

Revised Payment Schedule in separate recourse settlement agreement

10 days

Notification to PLN with IIGF deliver Notification of Payment Negotiations Schedule

Negotiations 20 days

If not agree - arbitration



Terms of payment Interest shall accrue from date of IIGF payment under the GA to PLN payment date under RA 

[Discussion: interest shall accrue starting from PLN’s payment due date until the actual payment]

PLN may not dispute any payment made by IIGF under GA including any changes thereof

 

[Discussion: PLN’s consent also be required to any payments agreed outside the terms of GA]



PLN may request a change in Payment Schedule which will trigger negotiation, then the Revised Payment Schedule will be stated in separate recourse settlement agreement



Payment made in Rupiah without (and free and clear of any deductions fo) set-off or counterclaim

Heads of Terms

PLN



Indemnification ◦ PLN to indemnify IIGF for all payments made by it under GA [Discussion: payments made by IIGF due to Gov FM should be excluded] ◦ A dispute in relation to, or the enforcement by the Seller of the Guarantee Agreement [Discussion : PLN has no control over whether or not IIGF brings a dispute under GA, therefore PLN cannot indemnify IIGF and it should be Seller who indemnify IIGF]

Heads of Terms

PLN



Consent

◦ PLN is required to obtain consent from IIGF and GoI for any termination of the PPA by PLN which is covered under GA, as part of giving the consent, IIGF and GoI need to state that they are each satisfied that PLN has the financial resources available to it to pay the purchase price when due and payable [Discussion: even if PLN doesn’t have enough funds to pay the purchase price immediately, the consent still can be issued if terminating the PPA is the most appropriate course of action rather than PLN have to pay deemed dispatched]

Heads of Terms

PLN

PLN

PPA Signing

FC

COD

End of PPA

Prior to FC

After FC – Prior to COD

On and After COD

Case A

Case B

Case C

PLN’s Default

-

Case D

Case E

PFM

-

Case D

Case E

PLN FM (Other than PFM)

-

Case D

Case E

Seller’s Default

Termination – Possible Cases

Case

Cause

Termination

PLN

A

- Seller’s inability to reach CP on FC date [16.3.1]

- PLN seize Stage I Guarantee (IDR 276 billion/US$ 30 million), except (i) inability to secure project site and special facilities and (ii) MAC, of which US$ 5 million is entitled to PLN

B

- Seller’s Event of Default after FC but prior to COD [16.3.2]

- PLN seize Stage II Guarantee (IDR 644 billion/US$ 70 million) - PLN has option to purchase the Project equal to - Outstanding debt plus interest due and payable, minus - Yet-to-disburse equity commitment

C

- Seller’s Event of Default after COD [16.3.3]

- PLN has option to purchase the Project equal to - Outstanding debt plus interest due and payable, minus - Yet-to-disburse equity commitment

Termination Treatment

Case

Cause

Termination

PLN

D

- PFM after FC but prior to COD [16.3.4] or - PLN FM (other than PFM) after FC but prior to COD [16.3.5] - PLN’s Event of Default after FC but prior to COD [16.3.4]

- PLN shall purchase the Project equal to: - Outstanding debt plus interest due and payable, plus - Actual equity contribution (capped at equity commitment), plus - ROE of 15% of the actual equity contribution, minus - DSRA and payment made by PLN during deemed period

E

- PLN’s Event of Default after COD [16.1.4] - PFM after COD [16.3.6] - PLN FM (Other than PFM) after COD [16.3.6]

- Purchase price based on outstanding debt and interest due and payable plus net present value of future CCR/CCRT, adjusted by average NDC, exchange rate, equity cash flows percentage at 33%, 45% and 60%; and discount rate of 15% (see 2.2 of Appendix F)

Termination Treatment

RFP, PPA & GA Negotiation Process. Non – PPP project

PPP - CJPP

Negotiation Method

 Only with the winning Bidder

 With all bidders through 1 on 1 meeting

Process of RFP issuance (Request for Proposal)

 One time issuance.

 Amended RFP through negotiation and 1 on 1 meeting

PPA Negotiation process

 Conducted after appointment / award of winner, only with the winning bidder.  PPA is signed after negotiation process  Negotiation and clarification of PPA continues until Financial Close

 Conducted before Bid Date with all bidders.  PPA will be signed after awarded of winner  No more clarification nor negotiation after awarded of winning bidder

GA negotiation and issuence process.

Conducted after appointment / award of winner, only with the winning bidder.

Conducted before Bid Date with all bidders

Transparency of the negotiation process

Only with the winning bidder

Open to all bidders

Beberapa Issues dari Investor Isu

Uraian

Bahasa kontrak

PPA menggunakan Bahasa Inggris dan Bahasa Indonesia, dimana Bahasa Indonesia menjadi acuan utama dalam hal dispute

Posisi PLN Mengikuti peraturan perundang-undangan

Cakupan definisi Tidak mencakup badan Government pemerintah dibawah Instrumentalities daerah tingkat 2 (kabupaten/kotamadya)

Mencakup perpanjangan pemerintah dibawah Pemda Kabupaten/Kotamadya

Pengadaan lahan

Lahan tetap tanggungjawab IPP

Permintaan dari bidders agar PLN melakukan fasilitas ipengadaan lahan

PLN

Thank You