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Projects

Project Brief

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
Rajamandala Hydropower Project
Project ID
11862
Fiscal year
2015
Status
Active
Guarantee holder
Japan Bank for International Cooperation
Mizuho Corporate Bank Ltd.
Investor country
Japan
Host country
Indonesia
Environmental category
B
Sector
Power
Date SPG disclosed
October 04, 2013
Project Board date
June 06, 2014
Gross exposure
 $200.0 million
Project type
Non-SIP
Strategic priority area
Complex Project
ESRS
Revised version in PDF, April 14, 2014
Original Version in PDF

View Summary of Proposed Guarantee


Project description

On August 7, 2014, MIGA issued guarantees of up to $200 million covering non-shareholder loans by Mizuho Bank Ltd. and Japan Bank for International Cooperation of Japan to the Rajamandala Hydropower Project in Indonesia. The coverage is for a period of up to 19 years against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.

The project consists of the development and operation of a 47 megawatt run-of-the-river hydropower plant near Bandung on Java Island on a build-operate-transfer basis. The plant is expected to generate approximately 181 kilowatt hours per year that will be sold under a 30-year power purchase agreement with PT Perusahaan Listrik Negara (PLN), a state-owned enterprise.

Despite a ramp-up in power capacity since the 1980s, the national electrification rate in Indonesia remains at 71 percent—leaving around 70 million people without access to grid electricity and forcing them to resort to costly and unreliable forms of power.  In addition, the country’s projected GDP growth of 7 percent will further increase the electricity demand.

Moreover, Indonesia currently relies excessively on expensive oil fired generation and needs to switch to cheaper fuel sources. The proposed project will help lower the current average cost of power produced in the country.

The power project is aligned with the World Bank Group’s Country Partnership Strategy for Indonesia, which stresses the importance of building energy capacity to sustain economic progress.

MIGA’s support for this investment is also aligned with the Agency’s priority of supporting investments into complex infrastructure projects.
 

 
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