State-owned utility company Perusahaan Listrik Negara (PLN) said it has secured a $1.62 billion syndicated loan facility to support its role in the government's ambitious 35-gigawatt power station development program. (Antara Photo/Mohamad Hamzah)

PLN Gets $1.6b Syndicated Loan for Giant Power Station Project

BY :BERNADETTE CHRISTINA MUNTHE

NOVEMBER 06, 2018

Jakarta. State-owned utility company Perusahaan Listrik Negara said it has secured a $1.62 billion syndicated loan facility to support its role in the government's ambitious 35-gigawatt power station development program.

The offshore United States dollar credit facility with 20 international banks, signed on Oct. 25, was the first of its kind for PLN, the company said in a statement on Monday.

"We see this as strong proof that PLN and Indonesia's credit profile is very good," PLN finance director Sarwono Sudarto said.

ANZ Banking Group, Bank of China, Citigroup Global Markets Singapore, Mizuho Bank, OCBC, Sumitomo Mitsui Banking Corp Singapore and UOB were the lead arrangers and bookrunners.

The new loan facility follows the issuance of around $1.5 billion in seven-, 10- and 30-year global bonds in US dollar and euro denominations by PLN in mid-October.

"This shows that overseas financial institutions are very interested in Indonesian infrastructure projects, especially in electricity," PLN spokesman I Made Suprateka told Reuters by text message on Tuesday.

PLN has an investment-grade credit rating of Baa2 from Moody's and BBB- from Standard & Poor's, equivalent to Indonesia's sovereign credit ratings in each case and reflect the firm's state-owned status.

However, according to the Organization for Economic Cooperation and Development, debt taken on by PLN and other Indonesian state-owned companies to finance infrastructure projects could expose them to cash flow constraints, "particularly if interest rates increase or projects are delayed."

This, in turn, could result in higher fiscal risks for the government, it said in a report last month.

PLN reported a net loss of Rp 18.48 trillion ($1.24 billion) for the January-September period, compared with a profit of Rp 3.04 trillion in the same period a year earlier, according to a financial statement published in late October.

The earnings showed a nearly 20 percent increase in fuel and lubricant costs in that period, a 13 percent increase in power-purchase costs and a near seven-fold increase in foreign-exchange losses.

PLN is expected to receive a Rp 6.5 trillion injection from the government next year as part of government efforts to shield the company from the impact of a currency slide – the rupiah has weakened around 8.6 percent so far this year.

The government's decision not to raise power tariffs until 2019 has also hurt PLN, as coal prices have climbed significantly this year.

PLN last reported a net loss in 2013, when it posted a Rp 26.23 trillion loss, which the company attributed to a 21 percent plunge in the rupiah's value, according to its financial statements.

Reuters

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