PLN to issue bonds to fund Java projects<\/p>\n
Sharon Lim, Dow Jones, Singapore<\/p>\n
Indonesia's state-owned electricity company is planning to
\nissue bonds in the domestic market to raise between Rp 500
\nbillion and Rp 900 billion (US$50 million and $90 million),
\nFinance Director Parno Isworo told Dow Jones Newswires in an
\ninterview recently.<\/p>\n
PT PLN plans to issue the bonds by June and the funds raised
\nwill be used to \"inaugurate power projects, specifically in the
\ncompletion of the southern transmission project in Java,\" where
\npower shortfall fears loom large, Parno said in the interview.<\/p>\n
Some of the funds from the bond issue will be used to pay for
\nthe cost of land acquisition and clearing for the southern
\ntransmission project, project management, and import taxes, he
\nadded.<\/p>\n
Upon completion, the southern transmission line will link
\npower generated from Paiton plants in east Java to Jakarta via
\nKlaten and Tasikmalaya, situated on southern Java, to supplement
\na northern transmission routing.<\/p>\n
The transmission network expansion will \"enable larger amounts
\nof power to be evacuated from East Java power plants to West
\nJava,\" which consumes 65 percent of the Java electricity load,
\nParno said.<\/p>\n
The \"lifting of (power distribution) bottlenecks\" will
\nfacilitate greater utilization of generating capacities in East
\nJava, where the country's largest independent power plants are
\ninstalled, he said.<\/p>\n
Financing for the southern power routing has largely been
\ncovered by the International Bank for Reconstruction and
\nDevelopment, Japan Bank For International Cooperation and export
\ncredit, Parno said.<\/p>\n
The export credit is a loan from French banks backed by a
\ngovernment export credit agency and is intended to promote French
\nexports. It was given to help finance the cost of imported
\nhardware for the project because of French engineering,
\nconstruction and procurement company Alsthom S.A.'s involvement
\nin the project, he said.<\/p>\n
PLN has yet to determine the type of bond it will issue and
\nother details such as maturity and coupons, although Parno did
\nsay it will \"depend on the market's appetite.\"<\/p>\n
PLN last issued a bond in 1997, just prior to the Asian
\nfinancial crisis, when it issued Rp 600 billion in 10-year bonds.<\/p>\n
The company has so far repaid Rp 2.5 trillion of the Rp 3.1
\ntrillion total raised through bond issues, Parno said.<\/p>\n
\"We have up to 2007 to repay the remaining Rp 600 billion,\"
\nParno said, stressing that \"even when times get rough, PLN won't
\ndefault on loans.\"<\/p>\n
PLN incurred sharp losses during the financial crisis as the
\nrupiah's collapse caused an increase in the company's operating
\ncosts and debt repayment obligations, which were pegged in
\ndollars.<\/p>\n
But the company's financial predicament was alleviated to some
\nextent when the Indonesian government approved a restructuring
\npackage last year to help revitalize the firm.<\/p>\n
The company also hopes to raise its revenues from the increase
\nin electricity tariffs over the longer term, which currently
\nremain below the cost of production.<\/p>\n
\"PLN is committed to raising the electricity tariffs gradually
\nto commercially viable levels,\" Parno said, adding that the
\ncompany has \"educated the Indonesian people on the tariff
\nincrease.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pln-to-issue-bonds-to-fund-java-projects-1447893297",
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"sponsor": "Okusi Associates",
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