Power firm PLN gets green light to pledge assets to secure loans

Saturday, July 21, 2007
The Jakarta Post, Jakarta

State-owned electricity firm PT Perusahaan Listrik Negara (PLN) has been given the green light by the State Ministry for State Enterprises to pledge its assets to secure loans for the construction of new power plants.

State Minister for State Enterprises Sofyan Djalil said Thursday evening after a coordinating meeting with Vice President Jusuf Kalla that PLN could use it assets to secure loans.

PLN had hoped to raise loans from various overseas creditors, mainly from China, to finance 85 percent of the cost of power projects worth Rp 79 trillion (US$8.7 billion), but the negotiations bogged down due to the lack of a government guarantee.

As a result, PLN cannot start the construction of the projects even though the contracts for some of them have already been signed.

PLN then sought the government's approval to allow it to pledge its assets as collateral for the loans

In March, PLN signed contracts for five coal-fired power plants, all in Java, with a total capacity of 3,300 MW.

They comprise the 600-MW Suralaya Baru plant in Banten, to be constructed by China National Technical Import & Export Corp. (CNTIC), the 600-MW Labuan plant in Banten, to be constructed by Chenda Engineering Corporation and its partner PT Truba Jurong Engineering, the 900-MW Indramayu plant in West Java, to be constructed by a consortium of China National Machinery Industry Corporation (Sinomach), China National Electronics Equipment Company (CNEEC) and PT Penta Adi Samudera, the 600-MW Rembang plant in Central Java, to be constructed by Zelan Malaysia, and the 600-MW Paiton Baru plant in East Java, to be constructed by China's Harbin Power.

In April, PLN also signed contracts for the construction of five coal-fired power plants with a total capacity of about 3,600 MW. They consist of 900-MW plants in Teluk Naga, Banten, and in Pelabuhan Ratu, West Java, and 600-MW plants in Jepara, Central Java, and in Pacitan and Awar-Awar, East Java.

These project form part of PLN's fast-track program to provide additional power supply of about 10,000 megawatts by the end of 2009 to cope with the country's acute power shortage.(02)