HK plays key role in giant Indonesia loan

PUBLISHED : Tuesday, 27 June, 1995, 12:00am
UPDATED : Tuesday, 27 June, 1995, 12:00am

UNITED STATES banking giant Chase Manhattan Bank says it is blazing a trail for power plant financing with its Hong Kong arm playing a key role in a package for an Indonesian project expected to cost US$2.5 billion.

The bank said the plant, which would take four years to build, would supply 10 per cent of Java's power needs.

The deal involves 'endorsements' from export credit agencies to alleviate fears about political risk in Indonesia.

The Hong Kong unit has put together a complicated structure that enlists the help of export credit agencies from Japan and the United States to underpin a syndication of $1.82 billion of the plant cost.

The deal underlines Hong Kong's role as a hub for power project financing in the region and for syndicated loans.

The proceeds of the syndications will finance a coal-fired plant using two 615-megawatt generators for the P T Paiton Energy Co. It was claimed as the largest financing deal in Asia and the first privately funded power project in Indonesia.