PLN plans bonds early next year

PLN plans bonds early next year

Dow Jones, Jakarta

Indonesia's state-owned electricity company PT Perusahaan
Listrik Negara, or PLN, said Tuesday it plans to issue bonds
early next year to fund an expansion of its electricity network
after large parts of the country suffered blackouts this year.

PLN will issue up to Rp 900 billion in bonds in the first
quarter of 2003, Jusuf Hamdani, a senior PLN official told Dow
Jones Newswires.

Indonesia's government is also hoping to persuade foreign
investors to buy separate dollar bonds to help with building more
power stations and improve the distribution network.

Although any issue from PLN will carry a quasi-sovereign
guarantee of repayment, foreign investors are likely to demand
high yields to invest in Indonesia at the moment.

The Oct. 12 bomb blasts in Bali added to already rising
concerns about the investment climate here. Security issues,
rampant corruption in the courts and rising labor costs are
pushing foreign investors to leave Indonesia for other countries
in the region, especially China.

Raising debt is crucial for the cash-strapped government if it
wants to head off an impending energy crisis, experts say.

The country's electricity generating capacity is expected to
fall short of demand by 2005 unless PLN increases capacity, and
scales back growing demand.

Jakarta is especially vulnerable to power shortages. In
September, much of the city was plunged into darkness for five
hours after a break in a transmission line from a nearby power
station.

Currently, the main island of Java's grid has reliable
capacity of around only 16,200 megawatts, with peak demand often
breaching the 14,000-megawatt level in the early evening.

Experts believe the country will need 2,300 megawatts in extra
power before 2005 to head off a crisis.