Asia Pacific Report
As a landmark project in Indonesia, this transaction is expected to act as a catalyst for further investments and fund flows in the country. Bertrand Baot, director and deputy head, project and structured finance Asia for Credit Lyonnais, writes about the deal. Last April, Mitsui & Co and a group of four commercial banks - Bank of Tokyo- Mitsubishi, Credit Lyonnais, ING Barings and United Financial of Japan - have jointly finalised a US$200m 4.5 years limited recourse financing for the Blue Sky project, promoted by Pertamina, the Indonesian oil & gas company.
On February 14, 2003, the closing of the landmark US$2.7bn restructuring of the PT Paiton Energy power project (Paiton) demonstrated not only a textbook restructuring for all stakeholders, but once again reconfirmed this unique project's position as a bellwether of investor and policy attitudes and a paradigm of the fundamentals of the project finance craft.
An industry traditionally supported by imports with local demand met by products manufactured offshore, China's domestic petrochemical industry is coming into its own. With five major joint venture petrochemical sector projects either currently under construction or development the PRC, all strongly supported by the Chinese government, the country will become increasingly independent in terms of petrochemical products and derivatives. In fact, experts continue to forecast high local demand in the coming years. Strategically, the projects will enable China's domestic petrochemical market to substitute imported products with those eventually to be produced locally. By Najeeb Haider, director and Michael Lau, vice president at global project finance & structured Trade, Citicorp International Ltd, Hong Kong.
The Trans-ASEAN Gas Pipeline (TAGP) project envisages the creation of a trans-national pipeline network linking ASEAN's major gas production and utilisation centres. Once realised the TAGP will have the potential of linking almost 80% of the ASEAN region's total gas reserves and will embody a far-reaching expression of the region's energy interdependence and long-standing interest in the co-ordination of energy activities. There is still much to do however in order to realise the dream, not least in establishing a solid legal and regulatory basis upon which the TAGP could operate in the best interests of all those who would derive benefit from such a network. By Peter Roberts and Alex Cull, Jones Day, Hong Kong.
India is a net importer of oil and gas with some 70% of its crude oil requirements coming from the Middle East. The government has been making attempts to increase its oil production as well to diversify fuel sources such as LNG. Oil accounts for about 30% of India's total energy consumption. The majority of India's roughly 5.4bn barrels in oil reserves are located in the Bombay High, Upper Assam, Cambay, Krisha-Godavari, and Cauvery basins. By Sharon Klyne.
Sakhalin Energy should contract by year-end Far Eastern offtake for at least 50% of its planned LNG plant on Sakhalin Island, while the Russian government looks set to finally decide in September which route it will prioritise for an oil export pipeline to the Far East from Siberia. These developments underscore the growing importance of a notional eastern export corridor for Russian hydrocarbons, and project finance has a part to play in this new chapter of the Eurasian energy story. By Daniel O'Sullivan.
Much has been written about the restructuring of the power sector in China during the last year or so. However, one is forced to recognise that most of the market research was aimed at assessing the potential impact of the reform on the government-owned Chinese Listed IPPs. Foreign IPPs and international banks have had limited involvement in the restructuring process so far. But one area that offers some promises for foreign investors is the increasing emphasis by the Chinese government on the development of the country's gas resources, and the necessity of securing substantial gas-fired power generation as an anchor to this new sector. By Eric d'Esparbes, Nicolas Poulteney, Francis Lung, Yi Zhang and George He Zhu of the Independent Power Producers Forum* (IPPF).
The privatisation of the energy sector in the Philippines has been moving so slowly that it is pushing away potential investors. The still weak regional economy is not helping, and sentiment was made worse with the recent slate of bad news. International investors may soon find Indonesia a better option following the recent conclusion of talks with the postponed IPPs. Minerva Lau reports.
The Japanese PFI market has been growing much more rapidly than even the optimists amongst us had dared to hope, and this trend looks set to continue for the foreseeable future. A key driver has been the mounting budget deficit with tax receipts plummeting under the weight of the continued recession, hence reducing the ability of the government to resort to fiscal stimulus measures via increases in the already huge public works programme. A natural response to this is to see an increased role for private finance. But the increased use of private finance does not just reflect a search for new sources of cash. In addition, Prime Minister Koizumi has strong belief that the private sector is more efficient than the public sector, and so has been advocating a greater role for the private sector in areas which have traditionally been the preserve of the public sector. By Yumiko Noda, partner and Takahiko Inoue, director of Project Finance and Privatisation, PricewaterhouseCoopers ...
The Pusan New Port project (the project), a marine container terminal and logistics hub, is being constructed in Busan, the Republic of South Korea (South South Korea). The project is one of several projects designated as priority infrastructure projects by the South Korean government under the Act on Private Participation in Infrastructure of South Korea (PPI Act). Pusan Newport Co Ltd (PNC), a joint-venture company established by some of the largest conglomerates in South Korea with Samsung Group as the lead sponsor and CSX World Terminals of the US as sponsor and operator. By Simon Black, partner and Geoff O'Dea, associate at Allen & Overy, Shin Kim, vice president & treasurer at Samsung Corporation and Ki Hoyung Choi, general manager, finance & accounting at Samsung Engineering & Construction.
The road sector has been identified as one of the key infrastructure bottlenecks impeding economic growth in India.
It has been two years since Beijing was selected as the host city to the 2008 Games of the XXIX Olympiad. And the prosperous capital city of China is celebrating the occasion, to show to the world that the place is healthy, after being devastated by the SARS outbreak. Preparations are now in full swing, as the Beijing government and its people look forward to host a great and green Olympic games. Minerva Lau reports.