PLN to float Rp 1t of bonds this year

PLN to float Rp 1t of bonds this year

JAKARTA (JP): State-owned electricity company PLN will issue bonds worth Rp 1 trillion (US$432.5 million) this year to partly finance new power projects.

PLN president Djiteng Marsudi said yesterday that the plan of the bond issuance had been approved by the government.

Around 80 percent of the proceeds raised from the bond issuance will be used to finance the construction of transmission and power plant projects in Java, he said.

The projects are part of the government's priority electricity projects in the current-five year development plan, he added.

Djiteng said that PLN needs at least Rp 7.8 trillion per year to finance its projects, which include power plants with a combined capacity of 9,552 megawatts and transmission networks with a total length of 10,548 kilometers.

He said that in addition to the funds from the bond issuance, PLN would also use an equity fund of around Rp 1.3 trillion, government expenditures of around Rp 900 billion, export credits of Rp 3.8 trillion and banking loans of Rp 800 million to finance this year's power projects.

The bonds will be the fourth to be issued by PLN. Last February, the company issued bonds worth Rp 1 trillion, much higher than those worth Rp 600 billion issued in 1993 and Rp 300 billion in 1992.

Djiteng refused to disclose when the new bonds would be floated.

"We have first to assess the market demand. We don't want the bonds to have the same fate as those sold last year," he said.

Djiteng said that the Rp 1 trillion bonds floated in February last year were unusually undersubscribed on the impact of the tight market liquidity.

He said that the interest rates of the new bond facility, which will have a maturity period of about four to seven years, would be floated on the basis of banking deposit rates. (hen)