Search for:

In brief

Indonesia’s state-owned power utility, PT PLN (Persero) (PLN), recently issued two invitations for renewable developers who want to be included in the list of selected developers (DPT) for solar PV and bioenergy (biomass and biogas) projects. Developers that pass the prequalification process will be eligible to be invited to participate in future PLN bids for those types of IPP projects.


What’s new?

1.   DPT invitations were issued for more limited types of power plants

PLN last held a prequalification process for renewable developers in 2019, for solar PV, hybrid energy, wind, biomass, biogas, biofuel, tidal, and new energy projects. PLN also opened another prequalification process in mid-2020 specifically for hydro projects.
In the 2019 prequalification process, developers only needed to participate in one prequalification process and could be included in the DPT for all eight types of projects. Now, if a developer wants to be included in the DPT for both solar PV and bioenergy (biomass and biogas) projects, it must participate in two separate prequalification processes. There has been no announcement on whether PLN will re-open the prequalification for other types of renewable projects soon.

2.   Developers that have been previously prequalified must re-register through PLN’s e-Proc portal

PLN previously held a DPT prequalification process for renewable projects (non-hydro) in 2017 (results announced in 2018) and in 2019. Therefore, developers that were previously included in the DPT should make sure they update their data in PLN’s e-Proc portal, and confirm whether they need to prequalify again.

3.   Applications to be submitted electronically
In the previous prequalification process, developers were required to submit hard copies of documents manually to PLN’s office. In the new processes, all documents are to be submitted electronically through PLN’s e-Proc portal.

4.   DPT is valid for three years

The invitations issued by PLN confirm that a DPT will be valid for three years, unless there is a change in the condition of the company that causes changes to the documents that have been submitted to PLN.

What are the criteria?

The criteria are similar to previous DPT prequalification processes, i.e.:

  • Country of origin 

Applicants must be Indonesian companies or companies from countries that have a diplomatic relationship with the Republic of Indonesia.

  • Financial criteria

Applicants must submit audited financial statements for the last three years and a financial credit rating report from D&B, S&P, Moody’s or Fitch. The announcements explicitly state that no other credit rating will be accepted. Similar to previous DPT invitations, an applicant entity can only submit its own financial statements and credit rating report. It cannot use financial statements and credit rating reports of its parent companies or affiliates.

  • Technical criteria 

Applicants must have experience in implementing at least one IPP contract, and/or EPC contract, and/or O&M contract for a power project completed within the past 10 years and for which the plant has at least one year of operation with a satisfactory record.

It appears that developers will be able to use their experience in power projects with different technologies from the relevant DPT. The announcement refers to “power project” instead of specific solar PV or bioenergy projects. Unlike the position with regard to the financial criteria, the invitations do not explicitly prohibit applicants from relying on the technical experience of their parent companies or affiliates.

Timing and registration fee

In previous prequalification processes, PLN only accepted applications and documents within a certain timeframe. The current announcements do not mention any deadline for registration, and state that PLN will carry out the evaluation process on a regular basis. This suggests that the DPT will be regularly updated and developers are welcome to submit applications at any time.

A registration fee of IDR 2.5 million (around USD 200) is required to participate in this process.

Conclusion

The DPT invitations are in line with the Government’s push for renewables, and are a welcome development. The use of PLN’s e-Proc web portal is also welcome, and will make it easier for international developers to participate in the prequalification process and future bids.

DPT announcement

Author

Norman S. Bissett routinely handles project and finance matters. He currently serves as a foreign legal consultant in the Finance and Projects Group of HHP, working specifically in the Energy and Resources practice. Mr. Bissett is admitted to practice in England and Wales and Scotland, and is a member of the Law Society of England and Wales as well as the Scottish Law Society.

Author

Nadia Soraya is a partner in the Finance & Projects Practice Group with many years of experience handling a wide range of finance and corporate transactions including project finance, general banking and finance, and mergers and acquisitions.

Author

Fanny Kurniawan is an Associate Partner in Baker McKenzie's Jakarta office.

Author

Anita Sungkono is an associate at Hadiputranto, Hadinoto & Partners which a member firm of Baker Mckenzie's Indonesia office. She is an associate in the Finance & Projects practice group. Involved in drafting agreements and providing legal advice in relation to power/electricity, construction (EPC contracts), infrastructure, public-private partnership, oil & gas and mining.

Author

Stephen Clugston is Counsel in the Firm'’s Tokyo office. He has worked in the area of international projects and project finance, advising sponsors, borrowers, government agencies, ECAs, multilateral finance institutions and commercial lenders across a number of sectors globally, and particularly in emerging markets.

Author

Martin David is a principal in the Finance and Projects Practice Group at Baker McKenzie Wong & Leow and heads the Projects practice in Asia and Singapore.

Author

Kim Hock Ang is a principal in Baker McKenzie Wong & Leow's Finance & Projects Team, where he focuses on major infrastructure project development and energy projects development (including LNG), from the inception stage where the consortium is formed and investment structure is designed, to the project documentation, financing and sale of such brownfield asset post commercial operation date. Kim Hock has acted in several award-winning projects such as the Sarulla Geothermal Power Project. It is the largest single-contract geothermal power project in the world, and it won Finance Deal of the Year (Project) at the 2015 American Lawyer Asia Legal Awards, among other accolades.