Professional Documents
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Project Summary
of Hydro Power Plants
• Develop initially a run-off river (RoR) hydro power plant in North Sumatra with net capacity of 2 x
6.5 MW.
• Expand to other 4 locations of hydro power plants with net total capacity of 168 MW.
• Secure long term Power Purchase Agreement (PPA) with stated owned electricity company, PT.
Perusahaan Listrik Negara (Persero) or PLN for 20 years and can be extended. The date of
PPA signing is 28 Dec 2009.
• The electricity output will provide a guaranteed revenue stream during the twenty years contract,
thus substantially providing a stable source of income. Revenue is generated by charging a
fixed electricity tariff. The levelized tariff for 20 years charged to PLN is IDR787/Kwh (equivalent
with USD cent 8.4). The first 5 year tariff is IDR 878/Kwh (equivalent with USD cent 9.4), and
will become IDR714/Kwh (equivalent with USD cent 7.6) in the year of 6 to 20.
• Beside earn fixed revenue from selling electricity to PLN, the Company is also eligible for CDM
(Clean Development Mechanism) that allow to earn additional income from certified emission
reduction (CER) credits. For 13 MW, it is expected to generate CER amounting to 71,500
tonnes per year.
The Project
• The 1st hydro power plant project will be erected in Lao Gunung river, Dairi regency, North
Sumatra, Indonesia with the capacity of 2 x 6.5 MW (Nett).
• The Company has completely acquired 100 % of the land required for plant site for the area of
approximately 10 Ha.
• The project is ready for bidding to select Civil and Mechanical & Electrical (M&E) contractors. It
requires 20 months to complete the construction of power plant.
Financial
• The 20 years contract with Titan is projected to be worthmore than IDR 1.46 Trillion
(approximately USD 157 Million). The projected average EBITDA and Net Profit After Tax
margin is 90% and 53% respectively.
PAGE 2
Project Summary of
Hydro Power Plants
2010
Funding Required
• Total capital expenditure requirement maximum is USD 26 Million which includes interest during
construction (IDC)
• The financing will rely primarily on a combination of bank loans and equity, with a debt to equity
ratio not exceeding 70:30. Currently several banks have been committed to provide loan portion.
The Company is now seeking fund to finance the equity portion.
With economic growth of around 5%-6% power requirement grows 7%-8% a year as against production
growth of only 3% per year. New power generating plants have not contributed significantly to supplying
capacity since 2006. As a result shortage in supply which will potentially cause a drag on economic
development.
Power requirement has been fast in the country with the growing industrialization, but the surge lately in
the requirement came with many manufacturing companies formerly using oil fuels chose to use PLN
electricity to generate energy after the surge in oil prices.
The shortage in supply is also attributable to many power plants being too old and inefficient. In addition
the process of production in a number of large power plants has been interrupted. In 2007, power
supply from Coal Fired Power Plants (CFPP) of Tanjung Jati B declined as a result of delay in supply of
coal to that power plant. Interruption in the process of production was also faced by other CFPPs. The
delay was caused by bad weather forcing postponement of coal shipments from outside Java.
The past several years, have seen uncertainty in domestic gas supply resulting in delay in the
construction of gas fired power plant projects. A number of oil fired power plants, which were already
converted into gas fired power plants were forced to use oil fuel again.
In a bid to cope with deficit in power supply in the country, the government has launched its first crash
program building coal-fired power plants with a total capacity of 10,000 MW. The program is expected
to be fully completed in 2012.
Energy and Mineral Resources Minister said Indonesia will still need 35,000 MW more power until 2015
the Minister, therefore, encourages development of renewable energy including hydro power plant and
asks IPP to accelerate development of their projects.
To reduce the energy crisis in Indonesian, Indonesian Minister of Energy and Mineral recently gave
PLN the permit to purchase energy from the third party since 22 October 2009 with the Letter of
Agreement number 4650/23/600.3/2009 from Dirjen Listrik dan Pemanfaatan Energi. The agreement
stated that PLN is obliged to purchase all the renewable energy in Indonesia. The electricity tariff is pre-
determined for type of hydro power plant with have capacity below than 10 MW. For those more than
10 MW, then the tariff is negotiated B to B.
PAGE 3
Project Summary of
Hydro Power Plants
2010
Titan Group will begin with 5 Hydro Power Plant projects in North Sumatera.
Lao Lao
No Project Name Unit Toba Pakpak A Papak B TOTAL
Gunung A Gunung B
1 Capacity MW (Nett) 13 20 60 15 60 168
4 Equity structure
The first project is located at Lao Gunung river, Dairi Regency, 150 km south of Medan, the capital of
the North Sumatra Province, Sumatra (Coordinate: 03° 02’ 16” N; 98° 10’ 16.5” E) which is able to
generate minimum electricity capacity of 2 x 6.5 MW.
Project Location
PAGE 4
Project Summary of
Hydro Power Plants
2010
Licenses
Until now Titan Group has obtained following licenses for build Lao Gunung hydro power plant in North
Sumatera:
PAGE 5
Project Summary of
Hydro Power Plants
2010
Water withdrawn from the source must move along a power canal or a pipe (penstock) to the turbine. If
the water source and turbine are far apart, the construction of the penstock may be the largest part of
the costs of construction. In mountainous areas, access to the route of the penstock may provide
considerable challenges.
At the turbine, a controlling valve is installed to regulate the flow and the speed of the turbine. The
turbine converts the flow and pressure of the water to mechanical energy; the water emerging from the
turbine returns to the natural watercourse along a tailrace channel.
The turbine turns a generator, which is then connected to electrical loads; this might be directly
connected to the power system of a single building in very small installations, or may be connected to a
community distribution system for several homes or buildings.
Hydro power plants construction at Lao Gunung is planning to be completed within 20 months. All civil
constructions must be complied with the following standards:
1. Indonesian Standard, which was issued from Indonesian Government
2. British Standards (BS) and Codes of Practice (CP) published by the British Standard Institution
3. A.S.T.M Standards (ASTM) published by the American Society of Testing Material
4. A.I.S.C. Norms
5. U.S.B.R. Standards
6. A.A.S.H.O. Standards Specification
7. A.C.I. Norm
8. Portland Cement Association (PCA) Design and Control of Concrete Mixture
9. Japanese Standard
Hydrology
Following is the hydro-climatology data from Lao Gunung hydro power plant:
PAGE 6
Project Summary of
Hydro Power Plants
2010
Financial Projection
Assumptions
Assumptions Unit
1 Production
1 Total days in a year day 365
2 Total operation in a year hour 8.760
3 Exchange rate US$/Rp 9.500
4 Capacity
1 Machine TURBO TECHNICS MW 13,0
2 x 6,5 MW MWh/year 113.880
KWh/year 113.880.000
2 Utilization % 85%
3 Production KWh/year 96.798.000
4 Losses % 0%
5 Sales KWh/year 96.798.000
2 Financial
1 Tariff Rp/KWh 878
2 Revenue Rp 84.988.644.000
3 Annual increasing cost
1 Labor Cost % 6%
2 Operational Cost % 6%
3 G&A Cost % 6%
4 Turn over
1 Account Receivable days 14
2 Account Payable days 14
3 Operational Cost days 30
5 Bank Interest
1 Investment Loan % 12%
2 IDC % 12%
3 Working Capital % 12%
6 Discount Rate 15%
7 Corporate Tax % 28%
8 Capital Expenditures
1 Bank Loan % 80%
2 Equity % 20%
9 Assets Life Cycle
1 Building years 20
2 Machinery and Installation years 20
3 Others years 5
10 Debt Period
1 Debt Service Period years 2
2 Grace Period years 2
3 Debt Maturity years -
PAGE 7
Profit and Loss Statement
2010
Unit Year
Profit & Loss -1 0 1 2 3 4 5 6 7
Opex Rp 3.598.205.574 3.598.205.574 3.598.205.574 3.814.097.909 4.042.943.783 4.285.520.410 4.542.651.635 4.815.210.733 5.104.123.377
EBITDA Rp (3.598.205.574) (3.598.205.574) 81.390.438.426 81.174.546.091 80.945.700.217 80.703.123.590 80.445.992.365 64.298.561.267 64.009.648.623
96% 96% 95% 95% 95% 93% 93%
EBIT Rp (3.598.205.574) (3.598.205.574) 69.963.399.067 69.747.506.733 69.518.660.858 69.276.084.231 69.018.953.007 54.071.521.909 53.782.609.265
PAGE 8
EBT Rp (18.051.940.374) (25.436.020.626) 49.217.474.768 52.277.254.691 57.507.862.580 64.908.521.221 69.018.953.007 54.071.521.909 53.782.609.265
CASH IN
2010
CASH OUT
1 Capex Rp 144.104.294.000 66.436.493.167 - - - - - - -
2 Opex Rp - - 3.598.205.574 3.814.097.909 4.042.943.783 4.285.520.410 4.542.651.635 4.815.210.733 5.104.123.377
3 Tax Rp - - 1.604.263.855 14.637.631.314 16.102.201.522 18.174.385.942 19.325.306.842 15.140.026.134
Total Cash Out Rp 144.104.294.000 66.436.493.167 3.598.205.574 5.418.361.764 18.680.575.097 20.387.721.933 22.717.037.577 24.140.517.575 20.244.149.511
Free Cash Flow Rp (144.104.294.000) (66.436.493.167) 78.130.600.026 79.570.282.236 66.308.068.903 64.600.922.067 62.271.606.423 45.582.153.625 48.869.622.489
Beginning Balance Rp - 3.910.619.994 1.857.612.515 23.344.109.032 33.147.780.806 32.850.513.801 20.291.156.017 82.562.762.441 128.144.916.066
Cash Available Rp (144.104.294.000) (62.525.873.173) 79.988.212.541 102.914.391.268 99.455.849.709 97.451.435.868 82.562.762.441 128.144.916.066 177.014.538.554
PAGE 9
BANK
1 Debt
1 Term Loan 168.432.629.734 Rp 115.283.435.200 53.149.194.534
2 IDC 13.549.162.367 Rp 5.164.354.793 8.384.807.573
2 Working Capital 30.000.000.000 Rp 15.000.000.000 15.000.000.000
2 Debt Amortization
1 Principal Payment Rp - - (18.198.179.210) (36.396.358.420) (54.594.537.630) (72.792.716.840) - - -
2 Working Capital Payment (30.000.000.000) Rp (15.000.000.000) (15.000.000.000)
3 Interest
1 Working Capital Interest Rp (1.800.000.000) (3.600.000.000) (2.700.000.000) (900.000.000) - - - - -
2 Term Loan Interest Rp (14.453.734.799) (21.837.815.052) (20.745.924.299) (17.470.252.042) (12.010.798.279) (4.367.563.010) - - -
Total Bank 119.194.055.194 51.096.187.055 (56.644.103.509) (69.766.610.462) (66.605.335.909) (77.160.279.850) - - -
Ending Balance Rp 3.910.619.994 1.857.612.515 23.344.109.032 33.147.780.806 32.850.513.801 20.291.156.017 82.562.762.441 128.144.916.066 177.014.538.554