PPA MODEL FOR PPP PROJECT

(1)

Jakarta – July 17, 2012

Assistia Semiawan – PT PLN (Persero)

)

PPA MODEL

FOR PPP PROJECT

(2)

PLN

Construction of PPA template



Risk Allocation



IPP Procurement Process



Financing

(3)

PLN

IPP Structure

&

(4)

General Structure of IPP Project

Equity

IPP Project Co

PLN

Project Sponsor

Lenders

GOI

Contractors

and

Suppliers

(EPC, O&M,

Fuel)

Debt

PPA

Gov. Guarantee

(5)

IPP vs EPC Project Structure

Equity IPP Project Company PLN Project Sponso r

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

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

Lenders GOI Contract ors and Supplier s (EPC, O&M, Fuel) Debt Guarantee PPA PLN Lenders GOI Contractors and Suppliers (EPC, O&M, Fuel) Debt Guarantee /Recourse

Proyek IPP

_{Proyek EPC PLN}

(6)

PLN

RISK ALLOCATION FOR IPP PROJECT

6

Risk

PLN

IPP

Share

Land Aq.

V

Environmental &

Social Issues

V

Fuel Supply

V *)

Construction

V

O and M

V

Exchange Rate

V

Inflation

V

Financing and

Interest Rate

V

Demand

V

Regulatory

V

Force Majeure

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

(7)

7

Risk Identification Specific to Mine Mouth

Site Risk Power Plant Site (land acquisition, resettlement , etc)

Design and Construction Risk Operation Risk Sponsor Risk*1 Financial Risk*2 Revenue Risk*3 Connectivity Risk Political Risk*4 Regulatory Risk

Coal Mine Site License, AMDAL, other permits

Geological research failure Power Plant

Coal supply and processing facility

Power Plant Operation

Coal Supply and Processing Operation General changes in law Specific changes affecting mine mouth

Coal transaction price related

Coal tax, royalty related Dispute with mine owner (e.g. shift to export)

Coal mine bankruptcy/owner shift

Coal processing ops failure Coal mine operation failure Coal price hike (cost hike) Risk

Tree

Force Majeure

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

(8)

PLN

History of IPP Mgt

&

(9)

KRONOLGI PENGELOLAAN IPP

Menyesuaikan dengan dinamika perubahan

IPP DOMESTIK IPP INFRASTRUKTUR 1992 - 98 1999 - 2003 2004 – 06 _{2005- 07} EVALUASI MASALAH MEYAKINKAN PASAR DENGAN ANAK-ANAK PERUSAHAAN PLN Renegosiasi Generasi I PPA AWAL Ex. 27 IPP Opsi I: PPP (Jaminan Pemerintah) Opsi II: PPA “B to B” RENCANA JAMINAN PEMERINTAH 2009 Bankabie PPA PLTU Jawa Tengah

IPP GENERASI I _{IPP GENERASI II} _{IPP GENERASI III}

Tahun 1992 – 97 : Generasi I, alokasi risiko kepada PLN dan ada Government Support Tahun 1997 : Penangguhan dan pengkajian kembali proyek-proyek listrik swasta Tahun 1999 – 03 : Renegosiasi 27 IPP

Tahun 1998 – 2005: Tidak ada pembangkit IPP yang baru

Tahun 2004 – 06 : Program kemitraan, skema “B to B”, tanpa jaminan Pemerintah Tahun 2006 – 08 : Generasi II, risks sharing, skema “B to B”, tanpa jaminan Pem.

(10)

PLN

Pengembang menyiapkan data kemampuan & Bentuk Konsorsium

PROSES BISNIS PANJANG DAN RISIKO TINGGI 1)

PLN umumkan hasil prakualifikasi PLN umumkan Prakualifikasi IPP PLN umumkan pengadaan IPP Pengembang check Lokasi & Studi Awal Pengembang jajaki Lahan, EPC Contractor, Lender, dll Pengembang Ajukan usulan Harga PLN umumkan pemenang Pengadaan & klarifikasi Pengembang menyiapkan dokumen, Garansi dll untuk PPA PLN & Pengembang ttd PPA Pengembang melakukan Feasibility Study, AMDAL, bebaskan tanah, cari EPC Contractor,

Lender melakukan Due diligence Bank mencairkan Pendanaan / Financial Close Proyek

Dibangun beroperasi IPP

7 – 9 bulan

12 bulan

36 - 54 bulan

Risiko-risiko:

 Kenaikan biaya konstruksi

 Kenaikan nilai tukar Rp, USD, JPY, RMB dll

 Risiko politik

(11)

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,

(12)

CJIPP (1) – Project Preparation and PQ Process

PQ Result:

Nine qualified Lead

Members under seven bid consortiums:

◦ China Shenhua

◦ Yudean Corp.,

◦ J Power and GDF-Suez

◦ KEPCO

◦ Marubeni

◦ Mitsubishi

◦ Mitsui and

International Power GOI announcement in IICE 2006

Article 7(1) (March 2008)

Inclusion of CJIPP in RUPTL 2007-2016

PQ Announcement

Article 8 (February 5, 2009)

PQ Meeting

PQ Date and Evaluation

Notification of PQ Result _{Article B.2 (Nov 5, 2009)}

A

(November 2006)

Article B.2 (July 28 – Nov 4, 2009)

Note:

Article X.X.X.X refers to the Appendix of the PPP Law (Date refers to completed or

scheduled proceedings)

Start

(July 2 2009)

Article B.2 (June 22, 2009)

CJIPP Discussion Forum (Market Sounding)

(13)

CJIPP (2) – RFP and Negotiation Process

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 RFP Article B.5 (Mar 25, 2010) Negotiation of RFP / Project Agreements Pre-Bid Conference

Final Project Agreements and amendment (Mar 25, 2010 – Mar 25, 2011) Amendment of RFP / Project Agreements Any Material Concerns None Article B.4 (Feb 25, 2010) A Yes Negotiation of Guarantee Agreement

Presentation, Term Sheet ,and Draft Guarantee Agreement

Amendment of Guarantee Agreement

Any Material Concerns

None

FS and Government Support Proposal to MOF Yes B (April 20, 2011) (July 16, 2009) 20 Amendments C (April 14, 2010)

(14)

CJIPP (3) – Evaluation of Bids

Final RFP, Project Agreements

and Amendment

Article B.6 (April 29, 2011)

Evaluation of Administrative and Technical Proposal (Envelope I)

Bid Submission

Evaluation of Financial Proposal (Envelope II)

Article B.7 (April 29 – May 23, 2011)

Article B.8

Rankings of Preferred Bidders Single Responsive Bidder Return Unopened Envelope II

and Proposal Security Comply with

RFP?

Responsive Bidders >1?

Evaluation of Financial Proposal (Envelope II) Article B.8.c.6 Article B.9 Article B.8.c.6 (May 24, 2011) Article B.10 Article B.8 (May 24, 2011) No (May 24, 2011) Yes Yes No (May 24, 2011) Article B.5 (April 20, 2011) (May 24 – June 8, 2011) Note:

scheduled proceedings)

@

(15)

CJIPP (4) – Appointment of Bid Winner

Article B.10.b (May 31, 2011)

Report to CEO of PLN

Negotiation with Single Bidder

Announcement of Single Bidder

Evaluation and Response to Objection

Retender Negotiation Objection No Yes D Article B.10.c (May 31, 2011) Article B.10.d.7 Article B.10.d.8 (May 31, 2011) Article B.11 (June 1, 2011) Article B.12 (June 1 - 10, 2011)

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

PLN’s CEO determine Single Bidder Article B.10.d.10 (June 1, 2011)

Issuance of LOI to the Single Bidder

(June 10 - 16, 2011)

Announcement to All Bidders Section 26 of RFP (June 17, 2011)

End

Note:

(16)

Procurement Processes

For IPP Projects With PPP Scheme

Signing of:

1. Power Purchase

Agreement

2. Guarantee Agreement

3. Recourse Agreement

Pre-FS Finalisation Pre FS review and preparation of GAP Appointment of Consultants PPP scheme determined Consultation Screening Award & Signing Bid Submission & Evaluation One on one meetings Submission of GAP Appraisal Structuring Draft RFP released

IIGF Guarantee Provision Process

EOI and PQ process Final RFP released Issuance of In-Principle Approval

(17)

PLN

(18)

PLN

Debt and Equity Requirement



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

Project Size (MW)

Project Cost

($ million)

Equity ($ million)

(25%)

Debt ($ million)

(75%)

1600

2,400

600 1,800

2000

3,000

750 2,250

(19)

PLN

19

Financing Plan



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)

19

1600 MW

2000 MW

Note

Debt requirement

$1.8 b

$2.25 b

Multilateral 1

$ 250 m

Project limit

Multilateral 2

$ 200 m

Project limit

B loans under multilateral cover

$ 200 m

Export Credit Agencies

$ 1,150 m

$1,150 m

(20)

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

(21)

PLN

(22)

PLN

Kebutuhan Jaminan Pemerintah



Semua proyek IPP besar di Indonesia menggunakan ECA/bilateral financing (mis: US

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)

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

)

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

Risiko Politik

Risiko PLN’s Default

(23)

KRONOLOGI JAMINAN / DUKUNGAN

IPP DOMESTIK IPP INFRASTRUKTUR 1992 - 98 1999 - 2003 2004 – 06 _{2005- 07}

Jaminan / Support Tidak ada Jaminan

Renegosiasi Generasi I PPA AWAL Ex. 27 IPP Opsi I: PPP (Jaminan Pemerintah) Opsi II: PPA “B to B” 2009 Bankabie PPA PLTU Jawa Tengah

IPP GENERASI I _{IPP GENERASI II} _{IPP GENERASI III}

Jaminan



Perpres 67/2005 jo

13/2010



Perpres 4/2010 (Jaminan Kelayakan Usaha

(24)

Policy shifting toward better guarantee management .

. .

Road Map of Guarantees for Indonesia

’ IPPs

Support

Letter

Confirmation Note

Guarantee

Agreement

1 Addressee Project

Company

• Lender (JBIC)*

• Insurer (NEXI)**

Project Company

2 Coverage

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).

(25)

Legal Framework for PPP

*PPP Structure & Procurement Procedures

*Guarantee Scheme

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

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

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)

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

Government Guarantee Scheme through IIGF (Indonesia Infrastructure Guarantee Fund)

PPP Structure & Procurement Scheme

(26)

PLN

Skema Penjaminan Proyek KPS

1. 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

Kemenkeu

PT. PII

Penanggung Jawab Proyek Kerjasama (PJPK) Project Company Ekuitas Pinjaman

MDA

Counter Guarantee Single Window Policy Sponsor Lender Risk Sharing Backstop Facility Perjanjian Kerjasama Perjanjian Penjaminan acessoir Cooperation Agreement Perjanjian Regres 1 2 3 4 5 6

(27)

PLN

EPC Agreements

PLN

IIGF

and/or

MOF

Lenders

PPP

Co.

Sponsors / Share-holders Recourse agreement Guarantee Agreement PPA (Cooperation Agreement) Loan Agreement Sponsor Agreement/ Shareholders Agreement

ECP Contractor Fuel Supplier O&M Contractor 1 3 2 5 4 6 Fuel Supply Agreement 7 O&M Agreements 8

Contractual Structure

27

(28)

PLN

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)

(29)

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

(30)

PLN

Clause 8.2.1

Payment for Deemed Commissioning

Clause 8.3

Supplemental Payment for Emergency Output

Clause 14.3.3

(31)

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

(32)

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)

33 PPA

signing

Unit COD (___ month) Plant Construction period Financing Date Project COD

Operation period

(25 years)

Termination Agreement & Transfer Project Financing Period (12 month)

Commissioning

period ----days

TIMELINE PPA

(34)

PLN

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

(35)

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

(36)

PLN

(37)

37 PPA

Claim Due/Payable Remedial Program 30 Days

Applicable Cure Period 45 days Remedial Notice cc to IIGF Termination Notice 1 Termination Notice II 30 Days

GA

45 Days IIGF copied received remedial notice

1. PLN notify unability; or 2. PLN disputes amount. Deemed no dispute Guarantee Demand 60 Days Payment by IIGF 60 Days Payment by GoI 18 Months Determination Date

Claim and Payment Procedure for Non-Payment Default

*Subject to GA scheme

Verification Period Consultation phase Transfer Project * ____ Days * 30 Days Guarantee Payment

(38)

38 PPA

Claim Due/Payable Remedial Program 30 Days

Applicable Cure Period 45 days Remedial Notice cc to IIGF Guarantee Demand ___ Days *

GA

45 Days IIGF copied received remedial notice

1. PLN notify unability; or 2. PLN disputes amount. Deemed no dispute Guarantee Demand 60 Days Payment by IIGF 60 Days Payment by GoI 18 Months Determination Date

Claim and Payment Procedure for Payment Default

*Subject

to GA scheme

Verification Period

Guarantee Payment

(39)

PLN

CHANGE IN PPA

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

(40)

PLN

CLAUSE 16.3

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.

(41)

PLN

Guarantee Scheme

DEVELOPER

PLN

GUARANTOR

(IIGF &GoI)

GUARANTEE AGREEMENT RECOURSE AGREEMENT POWER PURCHASE AGREEMENT

(42)

PLN

Heads of Terms



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

(43)

43 REGRES

Claim Due/Payable Verification Period PLN Demand

from Seller PLN confirm

PLN doesn't confirm IIGF deliver Notification of Negotiations If not agree -- arbitration

Claim & Payment Procedure

10 days Negotiations 20 days Revised Payment Schedule in separate recourse settlement agreement Payment by

IIGF & GoI

Determination Date Payment Period Notification to PLN with Payment Schedule

(44)

PLN

Heads of Terms



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

(45)

PLN

Heads of Terms



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]

(46)

PLN

Heads of Terms



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]

(47)

PLN

Termination – Possible Cases

Prior to FC After FC – Prior to

COD On and After COD

Seller’s Default 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

(48)

PLN

Termination Treatment

Case Cause Termination

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

(49)

PLN

Termination Treatment

Case Cause Termination

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)