Also known as the Batang Power Station, the 2 GW coal-powered electricity generation plant is the first project to be delivered under Indonesia's PPP regime and is estimated to cost about $4.3 billion. On completion, it will be one of Asia's largest Independent Power Producers (IPPs).29
The project is co-owned by PT Bhimasena Power Indonesia (BPI), a consortium consisting of J-Power, Itochu Corporation, and Adaro Energy, to build-own-operate-transfer (BOOT) the new facility that will utilize ultra-supercritical pressure technology to improve access to electricity for 7.5 million people; in line with the Indonesian government's vision to expand power generation and increase transmission capacity.30
The IPP is to deliver electricity to Indonesia's government-owned power company, PT PLN (Persero), for 25 years pursuant to a Power Purchase Agreement (PPA) and transfer the facility to PT PLN thereafter to run for the remainder of the power plant's useful life. International Finance Corporation (IFC), a member of the World Bank Group and advisor to PT PLN on this project, was the neutral broker that recommended this transaction structure and subsequently proposed a risk allocation structure in the PPA to maximize bankability of the IPP while minimizing the risks to PT PLN.30 At one point a risk allocation mismatch between the Engineering, Procurement, and Construction (EPC) contract and the Power Purchase Agreement (PPA) threatened to derail the project, but this was ultimately resolved through risk transfer (insurance).