JOINT VENTURE CASE STUDY

CONFIDENTIAL BRIEFING FOR LOCAL PARTNER

1. BACKGROUND

PT Republik Power (RP) is a subsidiary of PT PLN (Persero) (PLN) which operates several
power plants in Indonesia.

PLN intends to appoint RP in a development of 100 MW floating solar power plant in Java Island
(Project). PLN requires RP to form a joint venture (JV Co) with a reputable renewables power
developer which has at least 1000 MW renewables power plant in operation (Selected Partner).
The shareholding composition is: (i) RP to hold 51%; and (ii) the Selected Partner to hold 49%.

RP requires the Selected Partner to:

 maximise the use of local content, either goods or services;

 raise the debt financing for the project;

 provide loans for the equity of RP. RP will not provide any cash for its own portion;

 agree on joint control for the management and supervision of the JV Co

2. PURPOSE OF THE MEETING

Both parties are represented by their chief executive officers, finance directors and outside legal
advisers. To date, there have been two high level meetings which have discussed general
concepts and the potential benefits to both parties of working in a joint venture.

The purpose of this meeting (although time is strictly limited) is to see whether, when more
detailed legal and commercial issues are discussed, there is the basis for an agreement. If there is,
then an agreed list of points will be recorded in a term sheet and this will form the basis for the
legal agreements. If not, the parties will go their own ways.

3. CONFIDENTIAL BRIEFINGS

As you might expect, each party has certain information and objectives that are not known to the
other party. This information appears in boxes in section 5 below.

You are asked to negotiate terms that as closely as possible meet the objectives of your client.
Please be creative and advance solutions which may help overcome problems.

4. RESULTS SHEET

You will be asked to complete an agreed results sheet which summarises the outcome of the
discussions (whether or not there is agreement on the point).

5. COMMERCIAL AND LEGAL ISSUES TO BE RESOLVED

5.1 Use of local content

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 There has been no manufacturers of solar power plant in Indonesia. As such, any
technology will be not proven and expensive if it has to be produced locally. RP
acknowledges this but RP is mandated by the Government to be the pioneer of this
technology by pushing the Selected Partner to search the market and induce local
players to enter into such solar power plant manufacturing industry. RP may accept if
the technology is not proven but the manufacturer has provide longer product
warranties.

5.2 Debt financing

RP has not been known for its credit capability to raise project financing. As such, RP
relies heavily on the Selected Partner to procure and select the most competitive
lenders. RP may be willing to provide the necessary security arrangement for the project
lenders. The Selected Partner may require the appointment of the Selected Partner’s
affiliate as the financial advisor for the Project.

5.3 Equity financing

RP requires the Selected Partner to provide financing for the shareholding portion of the
RP. RP is fine to provide undertaking that RP will not sell its shares.

5.4 Management and supervision

RP needs to show to the public that the Project is controlled by the Government. In
other projects, the Government would like the President Commissioner to be filled in by
a local person or someone from the Government. This will tell the public that the
Government is closely supervising the Project.

RP is however fine if the Project is jointly controlled.

RP does not object if the Selected Partner has full control of the implementation of the
Project cost and budget. However, any annual budget must be approved jointly.

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