FOR IMMEDIATE RELEASE December 15, 1999
Ken Murphy (202)565-3200
WASHINGTON -- The Export-Import Bank of the United States (Ex-Im Bank) is extending the availability period of its loan for Indonesia's Paiton power project to December 2000 to provide the project additional time to demonstrate its financial viability and economic sustainability.
Ex-Im Bank had provided a $540 million political-risk guarantee in 1995 to help finance Paiton's construction. Additionally, it had approved a 12-year direct loan to take out, or refinance the construction loan contingent upon successful completion and operation of the project and compliance with contractual obligations for take-out. The original deadline for take-out was October 15, 1999.
This decision allows Ex-Im Bank to maintain its credit standards while demonstrating its flexibility to meet the needs of projects adversely affected by the Asian financial crisis, said Ex-Im Bank Chairman James A. Harmon. We are hopeful that Paiton's financial prospects will improve, as the project is restructured and Indonesia's economy recovers.
Ronald P. Landry, President Director and Chief Executive Officer of P.T. Paiton Energy (PE), said: PT Paiton Energy commends the United States Export-Import Bank`s decision to extend the take-out period for the PE construction lenders. In taking this wise step, Ex-Im Bank has reaffirmed its confidence in the PE project.
Ex-Im Bank was unable to refinance the loan in October 1999. One source of the project's problems has been the Asian financial crisis, which has had particularly severe effects on Indonesia during the last two years, causing sharp reductions in Indonesia's demand for power and its ability to pay.
Paiton was one of the first limited-recourse projects supported by Ex-Im Bank under its Project Finance program. It was also the first independent power project in Indonesia.
Ex-Im Bank is an independent U.S. government agency that helps finance the sale of U.S. exports primarily to emerging markets throughout the world, by providing loans, guarantees, and insurance. Ex-Im Bank supported nearly $17 billion in exports in the 1999 fiscal year.