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International relations

Japan-led consortium to lend $1.3bn to Indonesia LNG power plant

Government-owned JBIC leads an effort to export infrastructure

A Mitsui O.S.K. tanker is seen carrying LNG.

TOKYO -- A consortium of international banks, led by the government-owned Japan Bank for International Cooperation, will jointly lend $1.31 billion for a thermal power station in Indonesia fueled by liquefied natural gas.

The project involves a host of Japanese companies, including trading houses Marubeni and Sojitz, as well as shipping company Mitsui O.S.K. Lines, and will represent a new push by the Japanese government to export infrastructure.

The financing will be undertaken by Japanese banks JBIC, Mizuho Bank and MUFG Bank, alongside OCBC Bank of Singapore, and French banks Societe Generale and Credit Agricole. JBIC will handle $600 million of the loans.

Japanese-government owned Nippon Export and Investment Insurance will extend coverage to parts of the loans carried out by the five private-sector banks.

The power station, to be built on the west side of the island of Java, will begin construction this year with a goal of starting operations in 2021. The generator will be connected by gas pipes to facilities used to unload and store LNG by the harbor.

With a generation capacity of 1,760 megawatts, the station will sell power to Indonesia's government-owned electricity giant PLN over 25 years.

LNG-fueled thermal power stations are cleaner than coal- or oil-fired power plants, and fit JBIC's goal of lending money to eco-friendly projects. In July the bank announced an initiative to extend low-rate loans to energy-saving projects such as subway construction, electric vehicle promotion and use of renewable energy.

Indonesia is seeing healthy energy demand as the economy grows. The government has plans to develop 56 gigawatts worth of energy in the next decade. Natural gas-fueled generation is expected to shoulder more than 20% of the country's energy supply.

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