PLN to float Rp 1t in bonds next month

JAKARTA (JP): The state-owned electricity company PLN is to float five-year bonds valued at Rp 1 trillion (US$432.9 billion) for three days from July 29.

"The bond issuance will be the biggest ever by PLN. But we still need more funds to finance our electricity projects," PLN president Djiteng Marsudi said in a public presentation on the bonds yesterday.

He noted that his company will use the proceeds from the bond issuance to finance the establishment of electricity projects in Java, Bali, Sumatra, Kalimantan and Sulawesi.

Sixty percent of the proceeds will be used to fund the construction of transmission and major substation projects in Java.

"The other 40 percent will be used to finance our distribution projects in Java, Bali, Sumatra, Kalimantan and Sulawesi," he said, but stressed that the funds will not be used to finance the projects of its subsidiaries, Pembangkit Jawa Bali I and Pembangkit Jawa Bali II. These were established last October and are scheduled to go public next year.

Djiteng reiterated that PLN, which was set up in 1959, is charged by the government with two missions. As a major state- owned utility it has to be an agent for national development, and at the same time ensure its subsidiaries remain commercially profitable.

He said that his company has yet to decide the interest rate for the bearer bonds and whether it will pay the interest quarterly or twice-yearly.

"But we'll accommodate the different interests of investors," he said when pressed by reporters about the rates.

"In the past we made the interest payments quarterly. But now we're seeking to make them half-yearly," he said, adding that the underwriters for the bonds are Danareksa Sekuritas, Inter Pacific Securities, Pentasena Arthasentosa and Makindo.

The bonds will be listed on the Surabaya Stock Exchange on Aug. 28.

The Rp 1 trillion worth of bonds will be the fifth set issued by PLN. The first bonds worth Rp 300 billion were issued in 1992, the second worth Rp 600 billion in 1993, the third worth Rp 318.43 billion in the first half of 1995 and the fourth worth Rp 680 billion in second half of 1995.

According to Djiteng, PLN needs at least Rp 7 trillion per year to finance its electricity projects.

During the last five years, PLN's sales have been increasing by an average of 13 percent a year. Its total sales last year were recorded at 49.8 tWh (terawatt hours, which is equivalent to one billion kilowatt hours) against 43.1 tWh in 1994.

Last year, the company posted a 60.6 percent increase in its profits to Rp 1.01 trillion from Rp 635 billion in 1994.

"The Development Finance Comptroller has awarded an unqualified opinion to PLN's financial report since the fiscal year of 1989/1990," he said.

Djiteng estimated that this year's sales will grow by 17.02 percent to 58.37 billion kWh (kilowatt hours). (13)