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Case Study

Technical and Commercial Due Diligence for a portfolio of power plants in Indonesia

Indonesia_Project Light

Advisian supported CITIC’s bid for acquisition of a business that owns and operates a portfolio of 13 power plants across Indonesia

The Situation

Advisian supported CITIC’s bid for acquisition of a business that owns and operates a portfolio of 13 power plants across Indonesia, of which seven are in operation while the other six are under construction, and required the services of technical advisor for the proposed transaction. The power assets include gas-fired thermal plants, hydro and geothermal. Since the power assets are of different technologies, arranging technical experts of different fields and the ability to review regulatory compliance requirements in a very tight timeframe became very challenging for the client. The limitation of data provided also required some key assumptions to be made by the experts based on their deep technical knowledge and operational experience of similar plants. The valuation of the assets under development was critical to the client, as they made up 50% of the entire portfolio.

Our Approach

A team of Advisian’s power plant and environmental experts worked with the client to undertake technical and commercial due diligence to review technical issues with design, historical plant performance, materials agreement with plant operation, current PPAs, and forecast of material risks and their impacts on plant performance and future costs. HSE performance and compliance for the plants were also reviewed with potential impact on CAPEX due to changing environmental laws highlighted. A comprehensive market study was also undertaken on the Indonesia power market to assess the attractiveness of these assets over time based on forecast of future energy demand and competition in the local power markets.

Value Delivered

The presence of the Advisian offices in Southeast Asia allowed site inspections to be carried out in parallel and provided our client with a comprehensive report within a tight timeframe. We also worked closely with the client’s financial team to provide key data for their financial model that included:

  • Sensitivity of the financial model based on different technical scenario
  • Forecast of the plant future performance and operating costs
  • Forecast of capital and maintenance expenditure
  • Significant issues or risks that have been identified where specific capital allowances have been set aside in the financial model inputs