China Construction Bank contributes $364 million to $520 million syndicated loan for 700MW Sumsel-1 Power Plant Construction Project

ICBC, BOC and China Construction Bank contributions to $520 million syndicated loan for 700MW Sumsel-1 Power Plant Construction Project On January 9, 2017, three Chinese state-owned banks (ICBC Indonesia, China Construction Bank, and Bank of China) and PT Shenhua Guohua Lion Power Indonesia (PT SGLPI) — a special purpose vehicle and joint venture between Shenhua Group Corporation Limited (75%) and PT Lion Power Energy (LPE) (25%) -- signed a syndicated loan agreement for the 700MW Sumsel-1 Power Plant Construction Project.

ICBC Indonesia provided $52 million (captured in Record ID#62064), China Construction Bank as the lead arranger provided $364 million (captured in Record ID#69418), and Bank of China provided $104 million (captured in Record ID#69419).

The commitment fee is 0.5%. However, its grace period is unknown. Shenhua Group Corporation Limited issued a corporate guarantee in support of the loan.

This $700 million project is being financed with a mix of debt and equity and implemented as an Independent Power Project (IPP) on a Build-Operate-Transfer (BOT) basis.

The purpose of the project is to construct a coal-fired power plant — with two, 350MW power generation units (Unit 1 and Unit 2) — in Tanjung Menang Village, Rambang Dangku District, Muara Enim Regency, South Sumatra Province (exact locational coordinates: -3.47666667, 103.99916667). It also involves the construction of an 80 km, 275kV transmission line to Betung substation.

Guangdong Power Engineering Corporation, a subsidiary of China Energy Engineering Group (CEED), is the general EPC contractor responsible for implementation.

However, Harbin Boiler Company Ltd. (HBC), a subsidiary of Harbin Electric, and Shandong Electric Power Engineering Consulting Institute Co Ltd are also involved in project implementation. Planet satellite photography demonstrates that construction was underway from March 2017 to April 2018.

In January 2018, it was also reported that the construction of the plant was causing flooding and damage to an adjacent oil palm plantation.

Then, in March 2020, 120 on-site laborers went on strike to protest health and safety violations, workplace discrimination, illegal layoffs, and the failure to pay for overtime.

During the same month, the project's sponsor declared force majeure and stated that development would be delayed as a result of the COVID-19 pandemic.

Then, on March 24, 2020, it was reported that construction and labor negotiations were being delayed due to the COVID-19-related travel ban preventing employees of Guangdong Engineering from returning from China. Construction restarted in September 2020.

The continuing construction of the coal power plant has caused controversy because it contradicts Indonesia's pledge to go all renewable from 2023. As of November 2024, the project was expected to be complete in December 2024.