Phase 2 · Step 6 — Sensitivities & Results

Working memo on the sensitivity analysis, special tests, and results synthesis. Revised 2026-05-16 for FM v02 — supersedes prior v01 sensitivity workbook.

1. What was tested

Sensitivity work executes through 06_code_files/run_cbg_price_sensitivity_v02.py (CBG price tornado at USD 9 / 11 / 13 / 15 per MMBTU) plus ad-hoc Python runs that call compute_model() with parameter overrides for the special tests below. v02 keeps the v01 testing scope but reflects the corrected capital structure (10-yr loan + 22-yr bond both at 7.0%), the 10%-of-CBG-sales carbon revenue formula, and the VAT working-capital line.

Tested per SPV:

• CBG price sensitivity at USD 9 / 11 / 13 / 15 per MMBTU (full per-SPV + portfolio output in References/price_adjustment.md)
• Leverage scenarios: 70/30 base → 80/20 → 85/15
• Bandung tipping-fee removal stress test
• Animal biogas yield at 300 m³/t low end (Bandung + Lamsel)
• Pasarjaya feedstock handling rebracket (BUMD in-kind vs partial vs fully commercial)
• VAT exemption (PMK 115/2021 Strategic Goods confirmed)

2. CBG price sensitivity — top driver across the portfolio

CBG offtake price is the single largest assumption. Under v02 carbon revenue moves with CBG price (10% × CBG sales), so the sensitivity amplifies beyond what v01 captured. With all three SPVs now including animal co-digestion and the Bandung tipping share calibrated to 20%, the portfolio holds the DSCR covenant floor across the full price band.

All three SPVs clear the DSCR covenant floor (1.30x) at every price down to USD 11/MMBTU. At USD 9, Lamsel DSCR drops below the floor (1.08x) and Lamsel Project IRR falls to 6.2% — Lamsel is the new marginal SPV at deep downside, replacing Pasarjaya which was the binding constraint under the earlier v02 base. Portfolio DSCR holds above the 1.30x covenant floor at every price from USD 9 upward.

The carbon-revenue formula change is the principal mechanical reason for the sharper compression vs v01: under v01 (carbon = USD 10/tCO2e × methane mass), carbon revenue was independent of CBG price, providing a cushion at low gas prices. Under v02 (carbon = 10% × CBG sales), both lines move together.

3. Special tests

3.1 Test A — Leverage scenarios per SPV

Re-lever from 70/30 base toward 80/20 and 85/15 (debt share / equity share):

DSCR floor (≥ 1.30×) holds at all three leverage ratios across all three SPVs at base CBG price, with substantial headroom (lowest is Lamsel 85/15 at 2.80x — 1.5x the floor). All three SPVs can absorb 85/15 leverage if the LP prefers higher Equity IRR. Project IRR is leverage-invariant in steady state (varies by basis points only). Equity IRR amplification under high leverage is mechanical — reflects the smaller equity base.

3.2 Test B — Bandung tipping-fee removal

Bandung tipping fee set to zero (single-counterparty stress on the Kota Bandung commercial arrangement). Note: base tipping share is now 20% (USD 5/tonne to SPV) rather than the original 40% — see §1 for context.

Removing the tipping fee moves Bandung Project IRR by 5.8 percentage points — material but Bandung still clears all targets and DSCR floor with comfortable margin. The lower base share (20% vs original 40%) reduces the counterparty-removal exposure by ~half compared to the earlier v02 iteration.

3.3 Test C — Animal biogas yield at 300 m³/tonne low end

Now applies to all three SPVs (each includes animal co-digestion under the v02 final structure):

At the low end of the animal biogas yield range, all three SPVs hold both targets and DSCR floor with comfortable margin. Lamsel is the most sensitive (Project IRR drops by 5.7 pp because the 100 tpd animal feedstock represents the largest share of total feedstock). Pasarjaya and Bandung absorb the downside cleanly.

3.4 Test D — Pasarjaya feedstock handling rebracket

Reverse the BUMD in-kind logistics recognition. With animal co-digestion now contributing materially to Pasarjaya EBITDA, the BUMD arrangement is no longer the binding constraint — even fully commercial pricing keeps Pasarjaya well above all targets:

Pasarjaya now absorbs fully commercial feedstock handling without breaching either the 15% Project IRR target or the 1.30x DSCR floor. The BUMD in-kind arrangement remains a meaningful USD/tonne lever but is no longer load-bearing for bankability — animal co-digestion provides the structural cushion.

3.5 Test E — VAT exemption (PMK 115/2021 Strategic Goods)

If the PMK 115/2021 Strategic Goods exemption is confirmed by Indonesian tax counsel, input VAT on equipment CAPEX falls to zero, eliminating the working-capital drag:

VAT exemption reduces peak equity outstanding by ~USD 0.3-0.5M per SPV (USD 1.23M aggregate portfolio reduction), and lifts Equity IRR by 3-5 pts depending on SPV. Project IRR is unchanged (VAT impacts equity only, not project-level cash). Tax-counsel confirmation of PMK 115/2021 eligibility remains the highest-value pre-close optimisation item.

4. Results synthesis

4.1 Base case headline

All three SPVs clear both Project IRR 15% and Equity IRR 20% targets at base case, with comfortable margins. Portfolio min DSCR (3.60x) sits at 2.8x the covenant floor.

4.2 Risk distribution across the portfolio

Under the v02 final structure all three SPVs are robust at base case. Sensitivities mainly bite at deep CBG-price downside:

• Pasarjaya is now the strongest SPV. Animal co-digestion (75 tpd) added a third revenue stream and lifted base-case Project IRR from 10.9% (earlier v02) to 30.9%. DSCR holds above 1.30x at every CBG price down to USD 9 (2.10x). Fully commercial feedstock handling no longer threatens bankability.
• Bandung is the second-strongest SPV. The recalibrated tipping share (20% / USD 5/tonne) gives Bandung 25.1% Project IRR and 3.80x min DSCR — still well above both targets, and the 80% retained by Kota Bandung aligns city/SPV economics for a more durable partnership.
• Lamsel is the new marginal SPV. At 22.5% Project IRR and 3.39x DSCR at base, Lamsel sits comfortably. But it's the first to breach DSCR at deep gas-price downside (1.08x at USD 9) and most sensitive to animal biogas-yield assumptions (Lamsel's 100 tpd is the largest animal-feedstock share).

4.3 Critical assumptions

Four assumptions concentrate the project's risk under v02 final:

• CBG price. Carbon revenue scales with CBG price (10% × CBG sales), so both lines move together. Portfolio Project IRR moves 26.2% → 21.3% → 16.0% → 10.2% across USD 15 / 13 / 11 / 9; DSCR 3.60x → 2.90x → 2.19x → 1.49x. Contractual price floor (e.g., USD 11/MMBTU) in the PGN/Pertamina offtake is a meaningful derisking lever.
• Animal feedstock supply across all three SPVs. 75 / 75 / 100 tpd at Pasarjaya / Bandung / Lamsel respectively. Pasarjaya sources from peri-urban West Java (Bekasi / Karawang / Subang); Bandung from Bandung Regency / Garut / Subang / Cianjur; Lamsel from established Lampung Selatan dairy and poultry catchments. Animal feedstock biogas yield (mid 400 m³/t) is the single most sensitive operating parameter — low-end (300 m³/t) costs Lamsel ~5.7 pp of Project IRR.
• Bandung tipping-fee structure. 20% SPV share (USD 5/tonne) is the negotiated split with Kota Bandung — should be reflected in the partnership term sheet alongside the in-kind MRF and program oversight commitments.
• PMK 115/2021 Strategic Goods VAT exemption. Worth USD 1.23M of peak equity reduction at the portfolio level if confirmed. Highest-value pre-close optimisation item subject to Indonesian tax-counsel review.

4.4 Investor structural responses

The v02 final risk profile is materially stronger than the original v02 build. Two structural items remain on the pre-close agenda:

1. PGN/Pertamina contractual price floor (e.g., USD 11/MMBTU minimum) keeps portfolio DSCR above the 1.30x covenant floor through gas-price downside.
2. PMK 115/2021 confirmation pre-close reduces equity ask by USD 1.23M and lifts portfolio Equity IRR by ~1 pt.

Per-SPV covenants are now defensible: every SPV clears DSCR floor at base, and Pasarjaya — previously the binding constraint — now clears all targets including downside CBG scenarios. Portfolio-level covenants remain the cleaner package for the LP but per-SPV is no longer a deal-breaker.