7.-ICED OJK Risk - Management.due .Diligence

BIOGAS POWER PLANT PROJECT
Business Process, Due Diligence and Risk

Management
USAID ICED II
Belitung, 26 October 2016
10/26/2016
OUTLINE
Small Scale Commercial Biogas Power Plant Business

Commercial Biogas Power Project Development
Biogas Power Project Due Diligence

Risks Analysis and Management

Pembelian/
Pengadaan Energi
Primer
Konversi Energi
Primer Menjadi
Energi Listrik
Produk
Penjualan &
Penyaluran Produk
Revenue/
Penghasilan
Energi Primer/
Sumber Energi
Terbarukan
Teknologi
Pembangkit Listrik
Tenaga Listrik
Titik Koneksi,
Jaringan Listrik PLN
Pembayaran PLN
BIOGAS DARI POME
PLTBG
20 kV, 50 Hz, 3 Phase
JTR 400 V, JTM 20 kV,

Transmisi diatas 20 kV
IDR/USD as FIT
Regulation
PLTBG= Pembangkit Listrik Tenaga Biogas

Model
Resources
Resources Owner
Developers
Resources Owner
FEEDSTOCK (POME)
Private / BUMN /
Public
Own Project
(In-House or Turn-Key)
BOO Scheme
(Built-Own-Operate)
Third Party
Project Developer
BOOT/BOT approach requires

Legally Binding Agreements on:
Land Use
Delivery of waste stream
Energy supply and purchase
Mechanism
BOOT Scheme
(Built-Own-OperateTransfer
Key Benefit of BOOT/BOT approach:

Reduces many financial risks for Host company of implementing an
improved energy system
Reduce energy costs in the near term, during BOOT period, and significantly
over the long term after transfer of assets
Improves Environment around mill
OUTLINE


Commercial Biogas Power Project Development:

Project Stages
3 ~ 6 bulan
Pra-Studi
Kelayakan/Pr
e-FS/FS
Studi
Lingkungan
Studi
Interkoneksi
Pengurusan
Ijin, Akusisi
Lahan
6 ~12 bulan
12 ~ 18 bulan
PJBL/PPA
12 bulan
Detail
Engineering
Design
Financing
Procurement
Equitas
Konsep/
Basic Desain
Perijinan &
Lahan
EPC Kontrak
Draft
O&M Kontrak
Draft
Typically 15 ~ 20 years
O&M
COD
Production
Construction
Fuel Supply
Agreement
Draft
Design & Planning Stage
Kualitas Basic Design & Planning yg baik menentukan

tingkat kelayakan finansial, ekonomi, dan lingkungan
dari proposal bisnis
Construction Stage
Operational
Stage
Project Management dan Kontraktor

yang berkualitas menentukan
suskes tidaknya tahap konstruksi
RISK MANAGEMENT and DUE DILIGENCE MUST BE DONE IN ALL STAGES OF THE PROJECTS!!
Commercial Biogas Power Project Development:

Project Timeline
3 - 6 months
6 - 12 months
6 - 12 months
12 18 months
Typically 15 ~ 20 years
1.
Pre-FS and & Interconnection Study
9. Obtain balance of permits & License
2.
Raise Seed Equity
10. Raise balance of equity
3.
Feasibility Study
11. Obtain debt financing
4.
Obtain Local Permits
12. Financial Closure
5.
Feedstock Supply Agreement (FSA)
13. Implement construction work
6.
Power Purchase Agreement (PPA) with PLN
14. Test Run and COD
7.
EPC Contract & O&M Contract
15. Operation Stage
8.
Land Acquisition
16. Project Transfer or Decommissioning
OUTLINE

Development of Commercial Biogas Power Project
Due Diligence of Commercial Biogas Power Project

METODE DUE DILIGENCE DALAM TAHAP DESIGN &

PLANNING (GREEN FIELD TYPE PROJECT)
Independent
Engineering
Consultant
konsultan ahli project
biogas yang
berpengalaman
nasional/internasional
cek semua aspek lingkungan

& sosial apakah ada
rencana mitigasi & alokasi
risk yg jelas?
cek semua aspek teknis

desain, analysis, metode
dan data apakah valid?
DETAIL DESK REVIEW &
ASSESMENT
Independent
Environment & SocioCulture Consultant
konsultan ahli
lingkungan,sosio-kultur
harus nasional/lokal
FIELD REVIEW/CHECK
cek semua aspek teknis yang

spesifik apakah ada masalah?
cek semua aspek yg berkaitan dengan legalitas

contract,perizinan, hukum apakah ada masalah?
Independent Law
Consultant
konsultan ahli hukum
harus nasional
Due Diligence Process
Independensi, kerahasiaan, bebas dari konflik

interest, quality & control risk management control
adalah kunci suksesnya due dligence yg berkualitas
Independent
Specilist
spesialis ahli project biogas yang
9
berpengalaman nasional/internasional
METODE DUE DILIGENCE DALAM TAHAP DESIGN &

PLANNING (GREEN FIELD TYPE PROJECT)
Independent
Engineering
Consultant
biogas yang
berpengalaman

ASSESMENT
cek semua aspek yg berkaitan dengan

legalitas, contract, perizinan, hukum apakah
ada masalah?
Independent Law
Consultant
harus nasional
cek semua aspek lingkungan

& sosial apakah ada
rencana mitigasi & alokasi
risk yg jelas?
cek semua aspek teknis

desain, progress project,
dan output apakah sesuai
dengan desain?
DETAIL FIELD REVIEW &

ASSESSMENT
Independensi, kerahasiaan, bebas dari konflik

interest, quality & control risk management control
adalah kunci suksesnya due dligence yg berkualitas
Independent
konsultan ahli
cek semua aspek teknis yang

spesifik apakah ada masalah?
Independent
Specilist
10
PROPER DUE DILIGENCE

GREEN FIELD TYPE
PROJECTS
PROPER DUE
DILIGENCE
DETAIL DESK REVIEW & ASSESSMENT of

PROJECT DEVELOPER and PROJECT
PROPOSAL + FIELD REVIEW/CHECK
Questions need to be answered:

Is the project developer a credible, experienced and financially
capable to develop the proposed project design?
Is the project proposal complete, qualified, and feasible?
Is the project location properly selected and located?
Is there any issue related to land right, environment and social
related to project site?
BROWN FIELD TYPE

PROJECTS
DETAIL DESK REVIEW & ASSESSMENT

of PROJECT DEVELOPER and PROJECT
PROPOSAL + DETAIL FIELD REVIEW &
ASSESSMENT
Questions need to be answered:

Is the project developer a credible, experienced and financially
capable to finish the proposed project construction/operation?
Is the project detail design complete, qualified, and constructible?
Is the project location properly selected and located?
Is there any issue related to land right, environment and social related
to project site?
TUJUAN DAN MANFAAT DARI DUE DILIGENCE

(DD)/UJI TUNTAS
TUJUAN:
1. Mengindentifikasi gap atau resiko yang ada pada proposal investasi yang
diajukan oleh pengembang proyek.
2. Mengundang pengembang proyek untuk melakukan proper mitigasi dan
proper alokasi resiko yang berhasil diindentifikasi dalam proses DD.
MANFAAT:
Mendapatkan proposal proyek dan pengembang proyek yang dapat
diandalkan dalam mengembangkan/mewujudkan proyek.
Note:
Due Diligence/Uji Tuntas adalah suatu proses yang berulang yang harus dilakukan oleh
lender/investor untuk sampai pada tahap dimana lender/investor yakin dan puas bahwa
tidak ada lagi gap/resiko signifikan pada proposal proyek yang diajukan oleh pengembang
dan lender/investor yakin bahwa pengembang akan mampu mewujudkan proyeknya
sesuai dengan target dan jadwal yang ditentukan, dan project tersebut mampu beroperasi
dan menghasilkan revenue sesuai dengan yang diperkirakan sehingga pada akhirnya
lender/investor sampai pada keputusan untuk membiayai proyek.
12
ASSESSMENT OF VARIOUS KEY ASPECTS IN THE DUE

DILIGENCE
Aspect of Structure Type of The Project
Aspect of Project Company & Sponsor
Aspect of Contractual Structure
Aspect of Technical (Engineering Design & Construction)
Aspect of Environment and Social Culture
Aspect of Financial
13
ASPECT OF STRUCTURE PROJECT (1)

LIMITED RESOURCE STRUCTURE, PROJECT FINANCING
PEMEGANG SAHAM
Partner 1
FUEL
SUPPLIER
Fuel Supply
Agreement
Partner 2
Shareholders
Agreement
Deliver or pay
Agreement
LENDERS
Loan Agreement
PLN
Other
equity
investors
POWER
PURCHASER
Power Purchase
Agreement
Take or/& pay

Agreement
Project
Vehicle
Permits &
Licenses
HOST
GOVERNMENT
Permits (IUPTL, Principal
Permit, IMB, UKL-UPL, Etc)
Loan Proceeds
Construction
Contract
Insurance
Agreement
O & M Contract
Sub-contractor
MAIN
CONTRACTOR
INSURANCE
COMPANY
EPC
Limited
Guarantees
O&M
OPERATOR
ASPECT OF STRUCTURE PROJECT (2)

FULL RESOURCE STRUCTURE, BALANCE SHEET FINANCING
PLN
POWER
PURCHASER
LENDERS
Loan Agreement
Loan Repayment
Power Purchase
Agreement
Take or/& pay

Agreement
Project
Sponsor
Loan Proceeds
Sales Proceeds
Construction
Contract
Sub-contractor
MAIN
CONTRACTOR
Loan Proceeds
EPC
15
GENERAL CHARATERISITICS
A small commercial project: The capacity of small scale Biogas Project
capacity is around 0.5 MW to 3 MW.
A dedicated Power Plant: A small scale IPP Biogas Power Plant that
connects and serves to PLN as a Sole Of Taker within TAKE OR PAY
PPA type or TAKE AND PAY PPA type.
Project Sponsor generally has Equity around 20-35% of total

investment cost and Lender provides Loan for the rest.
Project Company may use single EPC (turn key) contractor or some
different contractors for project construction.
Project Company may use different O & M contractor(s) to Operate

and Maintenance the Biogas Power Plant.
All agreements or contracts are significant for project risk allocations
BOO/BOT/BOOT agreement is complicated. All related parties are
looking for the best deal structure for the agreement.

DILIGENCE
Aspect of Financial
17
Review/Assessment of Project Company & Sponsor

Lakukan Audit/Investigasi pada Project Company dan Sponsor
pada:
Besarnya presentase saham masing-masing partner dalam project

Pengalaman partne & sponsor utama dalam pengembangan proyek
Role masing-masing masing-masing partner dalam project
Cek Share Holder Agreement/BOO/BOT/BOOT Agreement: Perjanjian
yang ada diantara partner (struktur, prosedur voting, dll)
Apakah sponsor utama memiliki dokumen legal yang cukup?
Financial Statement proyek (Proforma) dari sponsor utama
Struktur Manajemen Proyek, CV manager dan board member
Strategi corporate dan kebijakan manajemen finansial sponsor (termasuk
rasio finansial, dividend policy, dll)
Rencana pengembang untuk akses ke sumber-sumber pendanaan jika
sponsor kekurangan equity dimasa yang akan datang.
Flow Diagram to review/assess the Strength of Project

Company & Sponsor in the Project Development
Example Check list for DD of Project Company & Sponsor

(1)
No
Due Diligence Item
Informasi Yang Diperlukan
Shareholders and percentage of

ownership of each shareholder in
the Project Company
Project Company Name : PT. XYZ

Share holders:
a. Share holder 1 : ? %
b. Share holder 2 : ? %
c. Share holder 3 : ? %
d. Share holder 4 : ? %
Corporate Licenses
a.
b.
c.
d.
e.
f.
Approval Letter of Foreign Capital Investment ("SP-PMA")

MOLHR approval of the IPPs deed of establishment.
Certificate of Domicile issued by the Head of Sub District.
Registration of the Deed of Establishment with the DOT.
Corporate Financial Year Reports
Report on Domestic and Foreign Capital Investment
Activities
Shareholders review
a.
b.
c.
d.
Shareholders Agreement
Shareholders structure changes
Shareholders s structure changes
Voting procedures
Check
Yes
No
Example Check list for DD of Project Company & Sponsor

(2)
No
Due Diligence Item
Company Management Review
a.
b.
c.
CV of each manager
CV of each board member
Relevance of background experience
Proforma review
a.
b.
c.
d.
e.
Project assumptions are reasonable

Financial model is audited.
Sensitivity/scenario analysis conducted to weigh various risks.
Cost & production structure is appropriate from technical
perspective.
Technical specialists are involved in the analysis
Project sponsor experiences
a.
b.
c.
Experiences in RE power projects in Indonesia

Experiences in the similar/same power projects
Experiences in RE power projects in overseas
Project sponsor corporate

strategy
a.
b.
c.
Financial management policy (financial ratios, dividend policy)

Plan to access the equity market/investors in the future
Plan for developing future projects
Check

DILIGENCE
Aspect of Financial
22
Review/Assessment of Project Contractual Structure

Lakukan Investigasi pada seluruh kontrak/perjanjian yang meliputi:
Purchase Power Agreement (PPA)
Kontrak EPC, atau kontrak-kontrak dengan seluruh kontraktor.
Fuel Supply/POME Supply Agrement
Kontrak Operation & Maintenance (O & M)
Kontrak servis dan maintenance jangka panjang (Long-Term Services
Agreement LTSA) dengan suplier peralatan (jika ada)
Perjanjian jual beli/sewa tanah
Rencana persiapan Jaringan listrik dan Interkoneksinya ke grid PLN
Asuransi (Construction All Work, business interruption, third party
liabilities, dll.)
Example Check list for DD of Contractual Structure of The

Project (1)
No
Due Diligence Item
Land-lease agreement review
a.
b.
c.
d.
Agreement in place ?
Located in protected forest land?
Any guarantee on available capacity
Fair reward and penalty clause on meeting contracted
capacity
Interconnection and distribution

line arrangement review
a.
b.
c.
d.
e.
f.
Interconnection requirements
Agreement and planned facilities
Testing and Commissioning Date & Procedures
Interconnection point review
Transaction point review
Power meter review
Project insurance program
a.
b.
c.
Construction insurance all work

Business interruption insurance
Third party liabilities
Check
Yes
No
Example Check list for DD of Contractual Structure of The

Project (2)
No
Due Diligence Item
PPA review
a.
b.
c.
d.
PPA in place ?
Type of PPA contract: (take-or-pay contract)?
Any guarantee on available capacity
Fair reward and penalty clause on meeting contracted
capacity
EPC contract review
a.
b.
c.
d.
e.
f.
EPC contract or not

EPC salient features:
- Warranty
- Lump sum
- Cost plus fee
Match with PPA
O & M contract review
a.
b.
c.
O & M contract in place?

Match with PPA
LTSA with equipment suppliers
Fuel Supply Agreement (in case of

biomass/biogas projects)
a.
b.
c.
d.
FSA in place?
Supply guarantee
FOB/CIF price structure
Review of transportation methodology
Check
Yes
No
25

DILIGENCE
Aspect of Financial
26
Example Check list for DD of The Technical Aspect (1)

No
Due Diligence Item
Identify, evaluate & review Design Criteria Document
Check , evaluate and review Project Access Plans & related Issues
Evaluate & review POME and BIOGAS analysis
Evaluate & review energy analysis
Evaluate & safety design and analysis
Evaluate & review topographic studies
Evaluate & review geotechnical analysis
Evaluate & review M& E Equipment quality and specification
Evaluate & review Project Drawings
10
Evaluate & review Cost Estimate & cash flow, and Project scheduling
11
Evaluate & review design of transmission & interconnection system
12
Evaluate & review Project organization & quality control and O&M plan
Note
Example Check list for DD of The Technical Aspect (1)
No
Due Diligence Item
Identified risks and mitigation plan

development
a.
Has the project company done it?
Feasibility Study Review
a.
b.
c.
d.
e.
Is FS in place?
Is FS updated with the newest information?
Review of project layout
Review of general design
Review of DED by Technical specialists/consultants
Project Organization review (during

construction and operational
phases)
a.
b.
Key management post s are filled

Key management competency are relevant
Technology issues review
a.
b.
c.
d.
e.
f.
POME & BIOGAS study review

Feedstock availability and security supply study
Choice of technology review
Choice of equipment suppliers review
Choice of contractors review
Choice of DED consultant review
Check
Yes
No
28

DILIGENCE
Aspect of Financial
29
Review/Assessment of Environment & Social Aspects

Lakukan Investigasi pada aspek lingkungan dan sosial yang meliputi:
Kewajiban dan perijinan untuk memenuhi persyaratan lingkungan untuk
semua fasilitas proyek (AMDAL/UKL/UPL)
Dokumen AMDAL/UKL/UPL, apakah ada isu kritis lingkungan dan sosial
spesifik yang harus diperhatikan didalam pengembangan dan pengoperasian
PLTA. Apakah sudah diperhitungkan biaya yang mungkin timbul?
Aktivitas dan prosedur konsultasi publik: apakah sudah dilakukan atau
direncanakan? Bagaimana hal yang menjadi perhatian utama publik
dipertibangkan didalam dokumen AMDAL/UKL/UPL? Apakah ada protes
atau publisitas negatif untuk pembangunan proyek?
Tingkat pemahaman masyarakat terhadap manfaat PLTA
Example Check list for DD of The Environment and Social

Aspect (1)
No
1
Due Diligence Item

Review AMDAL/UKL-UPL

a.
b.
c.
d.
AMDAL/UKL-UPL in place?
UKL/UPL addresses and mitigates the environmental and
social risks
Critical socio-environmental issues addressed for project
development and operation
Critical socio-environmental issues reflected in the project
cost
Review description of project facilities
a.
Is there any potential risk that may affect project design

and investment and/or operational costs?
Review if public consultation

procedures and activities
a.
Are the procedures and activities have been completed (or

planned)?
Review key public concerns and how they are addressed
in project planning/AMDAL documents
Have there been any protests or negative publicity
regarding the project?
b.
c.
4
Review support from the local

communities
a.
Check
Yes
No
Does the local communities understand the benefit of the

development of RE project for them
31

DILIGENCE
Aspect of Financial
32
Review/Assessment of Financial Aspects (1)

No
Due Diligence Item
Note
Review rincian detail biaya proyek

(termasuk rincian biaya kontrak EPC
dan contingency
Konsultan independen harus mereview apakah detail

biaya proyek sudah diperkirakan dengan akurat.
Memastikan bahwa lingkup kerja kontraktor dan supplier
sudah lengkap tanpa ada kekurangan atau contingeny
yang kurang tepat. Garansi penyelesaian dari semua
kontraktor
Review kemungkinan terjadi COST OVERRUNS
Selain alokasi contigengy budget didalam total biaya

proyek, bank dapat meminta sponsor untuk berkontribusi
pada contingency modal yang siap untuk dilepaskan/
diberikan ketika diminta oleh bank.
(apakah diberikan skenario optimis dan pesimis

disamping skenario dasar, dan apakah diberikan juga
analisa sensitivitas & bagaimana rencana
mitigasinya?)
3
Bagaimana rencana pendanaan: terms for

subscription of shares by any other shareholder ;
terms of proposed bridge financing (if any); terms of
proposed senior debt financing
Review detil asumsi yang digunakan:

Asumsi Makroekonomi dan referensi asumsi yang
diambil.
Asumsi Finansial: suku bunga, financial fee, IDC,

Required ROR
Bank, as the senior debt provider, needs to ensure that it

has the strongest lenders security in the financing terms
Asumsi tersebut seharusnya realistik, tidak terlalu jauh

dari kondisi saat ini.Refernsi asumsi: Gunakan asumsi
dari sumber terpercaya APBN, BI dan BPS
Suku bungan dan financial fee harus dikonfirmasi dengan
sumber pendanaan.Praktek umum proyek: memasukkan
IDC dalam biaya investasi. - ROR harus reaslistik
33

No
6
Due Diligence Item
Review financial model:

Investment and operational assumptions
Energy sold and revenues; other revenues, if any (e.g.
carbon credit, steam, compost etc)
Operational costs; administrative costs (salaries); O&M
costs; lease payments, etc
Taxes
Depreciation and amortization of assets
Interest during construction
Insurance
Fees to be paid to the government, if any
Assumptions related to current assets and current
liabilities
Dividend pay out
Capital expenditures
Disbursement schedule
Review capital cost; major equipment,

civil work, mechanical and installation
work, transmission lines
Note
Check that the financial model assumptions,
costs and revenues are reasonable and
realistic (e.g. the price of CER/carbon credit);
comparisons may be made with other project
investments, best practices, or in accordance
with the accounting standard. The Bank will
take input from engineer about project output
and project cash flow
Different technology supplier may cause

differences in capital cost (for example Chinese
technology typically has lower investment cost
compared to its European competitors).
Therefore comparing the technology and the
cost proposed in important.

No
8
Due Diligence Item
Review the project profitability and debt

service capacity (ratios, sensitivity and scenario
analysis, debt service coverage ratio)
Review applicable PPA tariff (see if theres any price

escalation over time, pass through of feedstock prices, etc).
Note
Review that the project has adequate cash
flow to pay for the operational cost, debt
(interest and principal), taxes, and dividend
Bank would want to ensure that PPA tariff
would be able to cover the project cost and
return on equity to project sponsor during the
term of the PPA
PPA tariff should be able to cover the
operational and maintenance cost that are
influenced by inflation
For biomass project, feedstock supply risk,
including prices should also be reflected in the
PPA tariff (however, the current price regime
does not provide a basis for tariff indexation.
35
TYPICALL SMALL SCALE BIOGAS POWER PLANT

PROJECT: Project Cost Component
CAPEX:
Project Development Cost:
Permits, Overhead Cost, Study and Engineering Cost (Feasibility

Study, Interconnection Study, Feedstock Lab Test, Soil Test, UKL-UPL,
Basic Engineering Design)
EPC Cost:
Site Preparation & Civil Work

Digester System, Piping & Flaring
Gas Cleaning & Pumps System
Gas-Engines & Generator
Controller & Electrical System
Balance of Plants
Grid Interconnection System
Other Cost (IDC & Insurance)
Financing Cost:
Interest, Equity Return
Other Cost:
Insurance, Tax, CSR, etc
OPEX:
Operating Labor
General Administration & Others
Insurance
Digester Service & Maintenance
Gas Engine Service & Maintenance
36

PROJECT: Project Cost Reference (Value in 2008)
Sources: World Bank, 2008

PROJECT: Project Cost Reference of Biogas Power Plant
Project Cost Composition
Digester System
Unit Cost / MW
(USD Million)
CAL System
1.5 3
CSTR System
2.5 3.5
Install Capacity
CAL System Cost
1 MW
2,000,000
1.5 MW
2,500,000
2 MW
3,500,000
Capital Expenditures:
Project Development Cost
Site Preparation & Civil Work
Digester System, Piping & Flaring
Gas Cleaning & Pumps System
Gas-Engines & Generator
Controller & Electrikal System
Balance of Plants
Grid Interconection System
Other Cost (IDC & Insurance)
2%
5%
34%
11%
17%
10%
11%
4%
5%
100%
Operational Expenditures:
Operating Labour
General Administration & Others
Insurance
Digester Service & Maintenance
Gas Engine Service & Maintenance
25%
14%
5%
17%
39%
100%
Example Check list for DD of The Financial Aspect (1)

No
Due Diligence Item
Review the detailed breakdown of

total project costs
Information
a.
b.
c.
2
Review the probability of cost

overruns
a.
b.
c.
d.
Detailed cost has been accurately estimated

The Contractor(s) and Supplier(s)work scopes have full
coverage without gaps or inadequate contingencies
Completion guarantees of all parties
Check
Yes
No
The contingent budget allocation in the total project cost

Project sponsor(s) to commit contingent equity
contribution, ready to be disbursed upon request by the
bank
Check optimist and pessimist scenario besides basic
scenario
Sensitivity analysis and mitigation plan
Financing plan
a.
Check the financing plan: terms for subscription of shares

by any other shareholder ; terms of proposed bridge
financing (if any); terms of proposed senior debt financing
Review detail assumptions used
a.
Macroeconomic assumptions and the references of the

assumptions taken.
39
No
5
Due Diligence Item

Financial assumptions

a.
b.
c.
Interest rate & financing fees should conform to the

proposed source of fund.
Include IDC in investment cost
Expected return of equity should be realistic compared to
current economic condition & market return
Review financial model
a.
b.
Is financial model in place?

Financial model assumptions, costs and revenues are
reasonable and realistic
Review capital cost
a.
Is there any comparison of different capital cost at different

technology ?
Review the project profitability and

debt service capacity
a.
The project has adequate cash flow to pay for the

operational cost, debt (interest and principal), taxes, and
dividend
Check
Yes
No
40
No
9
Due Diligence Item

Review applicable PPA tariff

a.
b.
c.
d.
Theres any price escalation over time, pass through of

feedstock prices, etc
PPA tariff would be able to cover the project cost and
return on equity to project sponsor during the term of the
PPA
PPA tariff should be able to cover the operational and
maintenance cost that are influenced by inflation
For biomass project, feedstock supply risk, including prices
should also be reflected in the PPA tariff
Check
Yes
No
41
OUTLINE


ANALIS MANAJEMEN RESIKO PADA TAHAP DESIGN &

PLANNING
Independent
Engineering
Consultant
biogas yang
berpengalaman
Resiko-resiko baru
tambahan yg
terindentifikasi
Rencana-rencana
baru Mitigasi
Resiko

ASSESMENT
Independent
konsultan ahli
FIELD REVIEW/CHECK
Independent Law
Consultant
harus nasional

Alokasi Resiko kedalam
perbaikan Studi, Desain
Kontrak, dll.
Independent
Specilist
43
ANALIS MANAJEMEN RESIKO UNTUK

PENGEMBANGAN PROYEK BIOGAS
Pengembangan proyek IPP
skala kecil adalah pekerjaan
yang melibatkan
IDENTIFIKASI, MITIGASI
dan ALOKASI RESIKO
proyek selama
pengembangan dan
pengoperasiannya.
TANPA DESIGN, CONTRUCTION,
OPERATION & MAINTENANCE &
MANAGEMENT SAFETY YG TEPAT PROYEK
BIOGAS DAPAT MUSNAH TERBAKAR !!
Peran BANK dalam MANAJEMEN RESIKO

BANK harus memahami dan
memanajemen RESIKO
- Identifikasi Resiko
- Mitigasi Resiko:
Data yang akurat

Desain yang tepat
Lingkungan
Sosial
- Alokasi Resiko:
Contracts
Insurance
Management
CHALLENGES OF THE DEVELOPMENT OF BIOGAS

POWER PROJECT IN INDONESIA
Seduction of "free money" from CDM
Development of new estates is a priority for many palm oil mill enterprises
Self-contained business generally not interested in local interaction
Limited sense of obligation to operate cleanly
Permit issues: Limited GOI support: incentive + permits
Long wait to obtain PPA
Significant deposits and demanding supply condition made by PLN
Unrealizable grid infrastructure

Lack of business trust between business entities
Term & Condition Lender for Loan Application cannot be fulfilled by
Returns generally not attractive to developers
THE OVERALL PROPER PROJECT PROPOSAL

SUSTAINABLE SUPPLY OF FEEDSTOCK (POME, OTHER
ORGANICS WASTE)
+
SUITABLE ANAEROBIC DIGESTION TECHNOOGY
+
SUITABLE GAS HANDLING & SCRUBBING TECHNOLOGY
+
HIGH RELIABILITY & PERFORMANCE RECIPROCATING
GAS ENGINE
+
HIGH RELIABILITY GRID INTERCONNECTION
=
LONG LASTING, LOW COST INCOME STREAM + OTHER
BENEFIT
Note: by making good choices will a project be viable. Optimal decisions

are necessary for a good return.
ALIGN FINANCIAL EXPECTATIONS WITH REALITY

Capital cost of digester system...too much and it will slow
down the returns, say 30% total
Performance of biogas system...often overstated
Scrubber and gas handling .. must work well otherwise create
problems, say 20%
Gas Engines ...efficiency, reliability, focus on biogas,
maintenance support, parts cost, suggest 50% of total cost
(include transformer, control panel, MW switchgear)
Grid
Connection
requirement
and
cost..often
underestimated
Electricification costs ...variable and underestimated
A biogas project is an infrastructure project ...simple payback
periode 5 year or longer
UNDERSTANDING COMMERCIAL BIOGAS PROJECT

RISKS
Construction risks, process performance risks, operating risks
Risk management theory says: P(sucess) + P(failure) = 1
P(success)= high standards of gas yield, high performance, financial return, safe
operation
Resource of time, money, know-how are scarce, and there is competition
Wisely allocate scarce resources to increase P(success) or decrease P(failure)
Example of ways to increase P(success):
choose commercially proven technology
select good quality equipment
hire (possibly more expensive) qualified consultant
Examples of ways of decrease P(failure):
ensure senior management commitment
independent project assessment
detailed checking and review during construction
maintain effective communication
RESIKO DALAM PENGEMBANGAN PROYEK BIOGAS (1)

Identifikasi
Key area:
- POME & Biogas

analysis
- Geoteknik
- Project Layout
- Equipment
- Project Budget
- Logistik
- Distribusi listrik dan

interkoneksi jaringan
Mitigasi
Alokasi
Perencanaan dan Desain

yang tepat:
- Perizinan yang lengkap
- Kriteria desain berkualitas
- Analisa resiko kebakaran,
longsor, gempa bumi dan
desain pencegahannya yang
lengkap.
- Rencana pengoperasian,
pemeliharaan dan perawatan
yang lengkap & terjadwal
Resiko proyek di
alokasikan melalui
KONTRAK-KONTRAK:
- BOO/BOT/BOOT
agreement
- EPC contract
- Owner Financial Ability
- Insurance
- PPA
- Land Contracts
- Engineer
- Local Authorities
RESIKO DALAM PENGEMBANGAN PROYEK BIOGAS (2)

MANAJEMEN RESIKO penting dalam Kontrol Biaya dan Pendapatan Proyek
BANK SEHARUSNYA TIDAK MENERIMA RESIKO YANG BELUM
DIALOKASIKAN
Identifikasi
- Detail POME &
BIOGAS Analysis
- Analisa Geoteknik
yang cukup akurat
- Concept Design
- Batasan Lingkungan
dan Sosial
- Local Political Risk
- Kebutuhan Equity
Mitigasi
Alokasi
Akses Kapital yang cukup

Perencanaan dan target
yang realistis
Analisa Engineering yang
lengkap
Desain dilaksanakan oleh
Konsultan yg kompeten
Estimasi biaya yang
masuk akal dan lengkap
Securing Land Rights
Equipment Contract with

reliable supplier
Fixed price contract(s) for
Civil Works and
Installation
Proper Property Rights
Enforceable PPA
Completed Permits
Sufficient Capital Proper Project
Contingency
Quality Control
RESIKO KONSTRUKSI DALAM PENGEMBANGAN

PROYEK BIOGAS
RESIKO EQUIPMENT/PROCESS PERFORMANCE
RESIKO OPERASI
CONTOH RESIKO PROYEK KETIKA DALAM TAHAP

KONSTRUKSI DAN PENGOPERASIAN: KEBAKARAN
CONTOH RESIKO PROYEK KETIKA DALAM TAHAP

KONSTRUKSI DAN PENGOPERASIAN: INSTALASI LINING
COVER LAGOON YG TIDAK TEPAT
Resiko Biaya dalam pelaksanaan Konstruksi dan

Pengoperasian Proyek
Tahap Konstruksi:
Unexpected conditions
Design Changes
Delays
Delivery Delays
Commodity Prices
Contractor financial problems

Tahap Pengoperasian, Perawatan dan Pemeliharaan:
Hyper-inflation
Excessive repairs or replacement

Design related problems
Resiko-resiko kunci terhadap

Pendapatan Proyek (Revenue)
Kapasitas terpasang, instalasi, pengoperasian,
pemeliharaan dan perawatan pembangkit
Total volume BIOGAS yang tersedia Analisa POME

DAN BIOGAS
Total efficiency (including unit efficiency and losses in the
system)
Kerugian karena transmisi listrik dijaringan
Kehandalan Pembangkit
Currency/Inflation
DR. Hanny J. Berchmans

Clean Energy Project Development Consultant
6287775006229
hanny.berchmans@iced.or.id
+
USAID ICED Indonesia Clean Energy Development II

Implemented by
Tetra Tech | Complex World, Clear Solutions
Menara Jamsostek, North Tower 14th Floor | Jl. Gatot Subroto No. 38 | Jakarta12710 INDONESIA
Main: +62 21 5296 2325 | Fax: +62 21 5296 2326
www.iced.or.id

7.-ICED OJK Risk - Management.due .Diligence

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BIOGAS POWER PLANT PROJECT

Business Process, Due Diligence and Risk

Belitung, 26 October 2016

Small Scale Commercial Biogas Power Plant Business

Biogas Power Project Due Diligence

Small Scale Commercial Biogas Power Plant Business

BIOGAS DARI POME

20 kV, 50 Hz, 3 Phase

JTR 400 V, JTM 20 kV,

PLTBG= Pembangkit Listrik Tenaga Biogas

Small Scale Commercial Biogas Power Plant Business

BOOT/BOT approach requires

Key Benefit of BOOT/BOT approach:

Small Scale Commercial Biogas Power Plant Business

Biogas Power Project Due Diligence

Commercial Biogas Power Project Development:

Design & Planning Stage

Kualitas Basic Design & Planning yg baik menentukan

Project Management dan Kontraktor

Commercial Biogas Power Project Development:

Pre-FS and & Interconnection Study

9. Obtain balance of permits & License

Raise Seed Equity

10. Raise balance of equity

11. Obtain debt financing

Obtain Local Permits

12. Financial Closure

Feedstock Supply Agreement (FSA)

13. Implement construction work

Power Purchase Agreement (PPA) with PLN

14. Test Run and COD

EPC Contract & O&M Contract

15. Operation Stage

16. Project Transfer or Decommissioning

Small Scale Commercial Biogas Power Plant Business

Due Diligence of Commercial Biogas Power Project

METODE DUE DILIGENCE DALAM TAHAP DESIGN &

cek semua aspek lingkungan

cek semua aspek teknis

cek semua aspek teknis yang

cek semua aspek yg berkaitan dengan legalitas

Due Diligence Process

Independensi, kerahasiaan, bebas dari konflik

METODE DUE DILIGENCE DALAM TAHAP DESIGN &

DETAIL DESK REVIEW &

cek semua aspek yg berkaitan dengan

cek semua aspek lingkungan

cek semua aspek teknis

DETAIL FIELD REVIEW &

Due Diligence Process

Independensi, kerahasiaan, bebas dari konflik

cek semua aspek teknis yang

PROPER DUE DILIGENCE

DETAIL DESK REVIEW & ASSESSMENT of

Questions need to be answered:

BROWN FIELD TYPE

DETAIL DESK REVIEW & ASSESSMENT

Questions need to be answered:

TUJUAN DAN MANFAAT DARI DUE DILIGENCE

ASSESSMENT OF VARIOUS KEY ASPECTS IN THE DUE

ASPECT OF STRUCTURE PROJECT (1)

Take or/& pay

ASPECT OF STRUCTURE PROJECT (2)