PLN Turns to KIK-EBA for Financing
Jakarta. State utility company Perusahaan Listrik Negara plans to offer an asset-backed collective investment contract, or KIK-EBA, to investors in August, seeking to raise Rp 10 trillion ($301.11 million) for financing Indonesia's power development.
The company, which holds a monopoly on electricity distribution in Indonesia, is already one of the country's largest debtors, as it has been tasked with expanding Indonesia's electricity grid, while at the same time keeping power costs affordable.
PLN said the asset-backed investment contract will provide a larger pool of financing for the company.
"If there are more choices, we will be more flexible, and it is good for us," PLN finance director Sarwono said late on Monday (12/06).
Under the asset-backed investment contract plan, PLN will raise money from investors, who will receive their payback from receivables from the sales of electricity generated by the 3,400 megawatt power plant Suralaya in Banten that supplies 12 percent of Java's and Bali's power.
Sarwono said the investors will receive a guaranteed payback of Rp 2.5 trillion a year over the next five years.
"It is right for investors to invest in this KIK-EBA structure, because it has a much lower level of risk. The power generator is already operating. The investment is guaranteed by PLN, because it will be paid back from existing long-term power purchase contracts," he said.
Suralaya power plant, which is operated by PLN's subsidiary Indonesia Power, generates Rp 12 trillion in revenue every year, while PLN makes Rp 300 trillion in total every year, more than enough to cover its obligations to investors, Sarwono said.
He said PLN will use the proceeds to fund its power generation and distribution network, which still requires a Rp 1,000 trillion investment.
Jasa Marga, a state-owned toll road operator, has also turned to collective investment scheme to raise funds to meet President Joko "Jokowi" Widodo's ambitious infrastructure development goals without burdening the state budget for capital injection.
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