Project Financing Agreement Template for Indonesia

The Project Financing Agreement is a fundamental document used in limited recourse financing transactions in Indonesia, where the loan is primarily secured by the project's assets and cash flows. This agreement is essential for large-scale infrastructure, energy, and development projects where significant capital investment is required. The document must comply with Indonesian banking regulations, investment laws, and sector-specific requirements, including Law No. 25 of 2007 on Investment and Law No. 10 of 1998 on Banking. Project Financing Agreements in Indonesia often need to address unique local considerations such as foreign ownership restrictions, mandatory use of Indonesian Rupiah for certain transactions, and specific security perfection requirements. The agreement typically involves multiple stakeholders including lenders, sponsors, contractors, and often government entities, particularly for infrastructure projects of national importance.

1. Parties: Identification of the lender(s), borrower(s), and any guarantors or other key parties to the agreement

2. Background: Context of the project, purpose of the financing, and brief description of the project structure

3. Definitions and Interpretation: Comprehensive definitions of terms used throughout the agreement and rules of interpretation

4. Facility Amount and Purpose: Details of the financing amount, facility types, and permitted uses of the funds

5. Conditions Precedent: Prerequisites that must be satisfied before any drawdown, including required permits, authorizations, and documentation

6. Drawdown Mechanics: Procedures and requirements for drawing down the facility, including notice periods and documentation requirements

7. Interest and Fees: Interest rate provisions, calculation methods, payment dates, and all applicable fees

8. Repayment Terms: Repayment schedule, prepayment provisions, and mandatory prepayment events

9. Security Package: Description of all security interests, guarantees, and collateral securing the facility

10. Representations and Warranties: Standard and project-specific representations and warranties from the borrower and guarantors

11. Covenants: Positive, negative, and financial covenants applicable to the borrower and project

12. Project Undertakings: Specific undertakings related to project construction, operation, and maintenance

13. Events of Default: Circumstances constituting default and their consequences

14. Agency and Security Trustee Provisions: Appointment and powers of facility agent and security trustee if applicable

15. Payments and Tax: Payment mechanics, tax gross-up provisions, and tax-related representations

16. Changes to Parties: Transfer and assignment provisions, including any restrictions under Indonesian law

17. Administration and Notices: Administrative provisions including notice requirements and contact details

18. Governing Law and Dispute Resolution: Choice of Indonesian law and dispute resolution mechanisms

19. Execution: Signature blocks and execution formalities compliant with Indonesian law