Jakarta. Sovereign wealth fund Danantara said Monday that it was eyeing a stake of at least 30 percent in the nationwide waste-to-energy projects, which had gained interest from international lenders.

Danantara is forging ahead with its plan to set up waste-to-energy facilities nationwide in tranches, the first batch targeting 7 waste-infested cities such as the tourist haven of Bali. 

Danantara’s chief investment officer Pandu Sjahrir briefed reporters on the financing aspect behind this megaproject.

Pandu told the press that Danantara sought to hold onto at a minimum 30 percent stake in each project, but the ownership may differ depending on the respective negotiations. He signaled the possibility of Indonesia taking up foreign loans to construct the budget-heavy facilities that will process over 1,000 tons of waste a day each. 

“I have told [potential] technical partners that we [Danantara] want to hold a 30 percent stake, at the very least. However, we are happy if they want us to take 51 percent or more. What’s most important is how we can tackle the environmental problems,” Pandu said in Jakarta.

“Because the projects have good economic returns, it’s possible that our partners demand 51 percent or above ownership. We will surely discuss this. What’s most important is to finish the project on time, and make sure that the costs are within the set range.”

According to Pandu, Indonesia will secure debt financing to cover 70 percent of the costs. The rest is expected to come from equity financing. Pandu claimed that both national and foreign banks had lined up to lend some money. The businessman refused to disclose the interested lenders, although their countries of origin included Singapore, Japan, China, and Europe. He acknowledged that some private-owned Indonesian banks were keen on the waste-to-energy rollout.

Danantara still sticks to the plan of using a portion of the proceeds from the fully subscribed "patriot bonds" to fund the projects. The agency has aimed to raise around Rp 50 trillion or $3 billion from selling patriot bonds to the country’s wealthiest tycoons. 

A single waste-to-energy facility has a price tag of Rp 2.5 trillion and Rp 3.2 trillion (between $149.7 million and $191.8 million). The required investments differ depending on the capacity, location, and technologies. The internal rate of return (IRR), which reflects how an investment can be, is at a “high single digit”, according to Pandu. 

The first batch of the nationwide waste-to-energy plant rollout will also target Bogor, Tangerang, Semarang, Medan, Bekasi, and Yogyakarta. President Prabowo Subianto has urged Danantara to launch the projects soon, citing the waste problem’s effect on tourism. 

Danantara has put 24 companies, many of whom are Chinese, in a short list of technological partner candidates for the projects. Danantara said that foreign companies dominated the list as they had state-of-the-art incinerators that burn the waste materials. The selected investors will partner with local firms to set up a consortium, as Indonesia hopes for some technology transfers. The tender is expected to begin on Thursday.

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