BNI SUPPORT RENEWABLE ENERGY IN...

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BNI SUPPORTRENEWABLE ENERGY

IN INDONESIA

Jakarta 25 Oktober 2011

PT Bank Negara Indonesia (Persero) Tbk

BIOMASS ENERGY FINANCING PERSPECTIVE

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BNI Overview

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http://www.businessweek.com/index.html

BNI has a long track record in the Indonesian banking sector

The most extensive distribution platform

in Indonesia

The 4th largest commercial

bank by asset size

Strong low-cost funding base with low LDR

Compelling Brand Name – 65 years history

Network (over 1.295 outlets) including five overseas branches

Customer Base – over 12 millions customers

Stable and Strong Top Management team

Strong ROE and ROA improvement trajectory Source: Bank Indonesia, SPI Dec-2010

Asset Loan Deposit

2007: Secondary Offering, US$

445mn new Tier-1 capital1946:

BNI Established

Indonesia

Independence(17 August 1945}

1996First state-owned

bank, to “go public”

2000:

Post-recap, The Government Owned

99.1% of BNI

Today: Government owns 60,0% of BNI

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Network & Distribution

BNI’s multiple touch points for individual and corporate customers

Individual customer highlights

12,3mn deposit accounts

2,1 mm credit cards

83.000 mortgage customers

Corporate/SME customer highlights

163,500 corporate deposit accounts

1.000 corporate borrowers

83.000 SME lending accounts

Mobile banking

Call CenterConsumer

loan centers(37)

ATMs(5164)

Outlets

(1295)

Small business centers

(157)

Medium business centers

(20)

Indonesia (1290 Outlets)

Overseas officesSingapore (Nov 1955)Hong Kong (Apr1963)Tokyo (Sep 1969)London (1987)New York Agency (Apr 1971)

BNI has also entered into key arrangements with

prominent companies for payment channeling,

financing, loan distribution, and network/outlet

development

Platform for efficient and effective cross-selling of products and services

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BNI ratings

2009 2010

Fitch Rating

National long term rating Long term foreign & local currencyShort term foreign & local currencyIndividual rating Subordinated debt

AA (id)BB+/stable

BC/D

--

AA+ (idn)BB+/Positive

BC/D

--

Standard & Poor's Credit rating Senior unsecured rating Subordinated rating

BB-/Stable/BBB---

BB-/Stable/BBB---

Moody's

Long term local/foreign currency Deposit rating Bank Financial Strength Rating Outlook

Baa3/Ba3B1D

Positive

Ba2/Ba2Baa3

D-Stable

PefindoCorporate rating Bond 1 Subordinated

idAA/Stable

idAA/Stable

--

idAA/Stable

idAA/Stable

--

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BNI Support Renewable Energy

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One of its Mission BNI is concerned with the responsibility of Environment and Society.

BNI is a channeling bank for environment investment credit line from several donors institutions

such as Japan Bank (JBIC) and Kreditanstalt fur Wiederaufbau Frankfurt, Germany (KfW),

Dec 2005 BNI is the first national Bank as a member of UNEP FI (United Nation Environment

Programme for Finance Initiative )

Oct 2007 BNI elected as one of Global Steering Committee of UNEP FI

Dec 2007 BNI was the Official bank in the United Nations for Climate Change Conference in Bali

April 2008, BNI launched a green mortgage product to support “green living”.

July 2008 in its 62 anniversary, BNI declared a „BNI Go Green‟ programme

May 2009 BNI was the Official bank in the World Ocean Conference in Manado

What We Have Done

• BNI is the leading financial institution focus on support to social & environment development• BNI listed in Sri Kehati Index (Environmental based stocks index)

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Initiatives 2009 2010 2011 2012

New Value Creation BNI

Green

Engagement Green

Economic Value

BNI

Business Process

Mainstreaming

Green paradigm

into product

features

Policy development

Internalization &

deployment Green

Policy

Competency building

Internal Capacity

Building creating

green economy

awareness

Road Map of Sustainability

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Developing Green Initiatives

Non Business

(Indirect)

Restatement mission to accommodate Spirit of Sustainability

Socialization to stakeholders

Capacity building and implementing of green attitude

Participating in green events

Relationship & networking with green community

Business

(Direct)

Improving portfolio of green lending : forestry, creative industry, renewable energy, SME (KUR), PKBL, mortgage, green building

Improving green funding : partnership with foreign bank/financial institution (correspondence banks, JBIC, Kfw) also donors

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Scheme Financing

CSR

Partnership

Program

Loan

Program

Commercial

charity,

business responsibility

PKBL (Partnership Program and

Environment Development)

KUR (people based small business loan),

JBIC (PAE = Pollution Abatement Equipment),

KfW (IEPC = Industrial Efficiency and

Pollution Control)

Business as usual

(Small, Medium, Corporate Segment)

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Renewable Energy- Power Plant -

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Loan diversifications

Sectors 2Q-2010 2Q-2011

Manufacturing 25% 18%

Trading, Resto & Hotel 20% 18%

Agriculture 7% 7%

Business Service 7% 10%

Constructions 7% 6%

Transportation & Comm 7% 6%

Social Services 2% 1%

Mining 4% 7%

Electricity, Gas & Water 3% 6%

Others 5% 6%

Consumer 13% 15%

TOTAL LOAN [Rp Bn] 126.231 152.896

Loans by Economic Sector

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Green Financing

BNI support Green Project :

1) Wayang Windu Geothermal Project in West Java 2 x 110 MW, USD 90,712 Mio

2) Patuha Geothermal Plant 1 x 55MW, USD 103 Mio

3) Poso Energy Hydropower Plant in Central Sulawesi 3 x 65MW

4) Hydropower Plant in Sawangan North Minahasa 7 MW, USD 4,9 Mio

5) Waste recycling (turn bottle plastic and such into valuable Dacron), Rp.20 Bio

6) Biofuel Project from waste of Palm Oil in Batam 1.000 ton/day , Rp.246,541 Bio

7) Etc

Green Financing

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SPECIAL

PURPOSE

COMPANY

(SPC)

SPONSOR

Shareholder Agreement

(Subordinated Loan/SOL)

GOVERNMENT

EPC

CONTRACTOR

SUPPLIER

O&M

CONTRACTOR

THIRD PARTIES AGREEMENT

INVOLVED

Concession

EPC

Contract

Supply

Agreement

O&M

Contract

OFFTAKER

ARRANGER /

CREDITORS

LOAN

PACKAGE/

AGREEMENT

EXPORT CREDIT

AGENCY (If

Available)

INSURER

Insurance

Renewable Energy Power Plant Project finance

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KEY SUCCES

Melayani Negeri Kebanggaan Bangsa

KEY

SUCCESS

Kontinuitas Raw Material

(energy sales contract, fuel supply agreement, ext )

Structuture of Electricity Tariff Sponsor

Track Record in

Power plant project

Consultants

• Legal Consultant

• Environment Consultant

• Insurance Consultant

• Technical Consultant

• Geothermal and Geology Consultant (depent of type of the Power Plant)

Key Success Factor

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Renewable Energy- Powerplant Financing Risk -

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ASPEK RESIKO (1)

RISK TABLE MITIGATION PLANDESCRIPTION

1. CHARACTER

2. CAPITAL

Self Financing

Know Your Customer

Key Person

• No - NPL dan black list from Bank Indonesia


• Independent Consultant – Public Accountant – Self Financing Proven

• Cost to complete

• Turn key / semi turn key project

• Escrow Account

• Financial Activity via BNI

Self Financing Commitment

3. CAPABILITY

Operasional

Capability to operate Power Plant • Select Operational and Maintanance operator who has experienced in Power Plant

• Insurance Cover (business interruption, machinery breakdown) – Banker’s clause

Risk Aspect

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ASPEK RESIKO (2)


4. CAPABILITY

Fuel Supply

5. CAPABILITY

Construction

Continuity of Fuel Supply (geothermal, Water) • Coal supply Agreement / Energy sales contract

• Certification (geothermal, coal)

• due diligence of fuel supply.

Specification of Project Construction • independent Consultant

technical assessment, project monitoring

construction mgmt

• project design, supervision, manufacturing & installation

• Insurance Cover (property all risk)


6. CAPABILITY

Cost Overrun

Project cost • Turnkey project

• Hedging

• Self financing

Risk Aspect (2)

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ASPEK RESIKO (3)


8. CONDITION OF

EKSTERNAL

Environment

9. CONDITION OF

EKSTERNAL

Sensitifitas

Environmental issue • AMDAL, RPL and RKL Documents

• Independent Consultant – environmental assessment

Feasibility Study :

1. EPC Cost increase

2. Interest Rate

3. Fuel Supply

4. Electricity Production

• Turnkey

• Cost Overrun - self financing portion

• Performance/ Technical guarantee from Equipment supplier

• Insurance Cover (business interruption)


7. CONDITION OF

EKSTERNAL

Government Policy

Changing of Government Policy • Power Purchase Agreement

• Insurance Cover “default payment” –Banker’s clause

Risk Aspect (3)

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ASPEK RESIKO (4)


11. CONDITION OF

EKSTERNAL

Fire / accident

Fire and Accident during construction period Insurance Cover (shipping, equipment manufacture, erection s/d COD)


CollateralCollateral :Project itself - Power Plant Electricity Revenue - Escrow Account

12. COLLATERAL

Guarantee

10. CONDITION OF

EKSTERNAL

Currency

• hedging or cross currency swap

• Forex LineCurrency fluctuation

Risk Aspect (4)

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CASH WATERFALLRenewable Energy

Financing Issues

1. Construction risk – civil work, ex : Hydro Power Plant

2. High Investment on exploration stage, ex : Geothermal (drilling)

3. Bank could not finance on exploration stage (High Risk) ex : Geothermal

4. Limited of Green Policy, Rule and framework

For instance : no rule of green product and regulation about contribution of government commitment to reduce carbon emission

5. Technology and Equipments reliability

6. Project’s feasibility Electricity pricing, amount of investment

7. Banking sector needs long Term and low cost funding

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- Renewable Energy -Conclusion

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BNI‟s Sustainability ObjectivesConclusion

1) BNI, the banking sector can serve as a very effective intermediary as it has already invested in the branch network throughout the archipelago. (no need to reinvent the wheel)

2) Despite the absence or lack of regulation, BNI programs have pushed forward sustainability initiatives

3) Regulations would certainty be a push factor to encourage various relevant stakeholder to take part more effectively across industries, sectors, communities

4) Incentives are key to speed up the process. In order to incentivize the

market/communities, we need competitive and attractive pricing

5) Long term low cost funding sources can help banks to design products and schemes to attract investor - Renewable Energy Project.

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THANK YOU

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