Shearman & Sterling advised Abu Dhabi Future Energy Company (Masdar) and Pembangkitan Jawa Bali Investasi (PJBI), a subsidiary of Indonesian national electricity utility PLN, on the USD114 million financing of a 145MW floating solar photovoltaic power project on the Cirata Reservoir in Indonesia, the largest photovoltaic installation in Southeast Asia.
Cirata project is also the first renewable project to proceed under a presidential regulation that requires a PLN subsidiary to hold a 51% stake in the project company to, among other things, facilitate local capacity building and knowledge transfer.
“This gives rise to a number of issues from a bankability perspective, due to the restrictions under the World Bank’s loans to Indonesia on any Indonesian state-owned entity or its subsidiaries granting security over their assets,” Shearman & Sterling partner Jean-Louis Neves Mandelli, who led the team in Singapore, told Asia Business Law Journal.
“We led the efforts in developing arrangements to overcome these issues in a bankable manner, both with respect to the restrictions in the grant of security over the project company’s assets, and PLN’s subsidiary’s shares in the project company.”
Mandelli, who was supported by associates Ashiq Aziz and Kyle Koh, said that Cirata achieving financial close paved the way for the development of future renewable projects in the country.
The financing came from Sumitomo Mitsui Banking Corporation, Societe Generale and Standard Chartered Bank. The plant is expected to start commercial operations in the fourth quarter of 2022.
“Cirata is also an example of how floating solar can be a very helpful solution to integrating renewable power into Southeast Asia, as there are significant time and cost savings from not having to acquire land rights, which can be very expensive, but it is also more advantageous to all stakeholders as they do not require a shift in land use for the development.”