BP Migas to evaluate PLN?s standby L/C blanket guarantee

Indonesia?s upstream authority for oil and gas BP Migas will evaluate the requests of the gas producers for the standby letter of credit (SBLC) blanket guarantee from the state-owned electricity company PT Perusahaan Listrik Negara (PLN), Bisnis Indonesia and Investor Indonesia newspapers reported on Monday.

?Each gas producer?s request is different from others. I hope the lowest figure will be the bench mark for every gas producer. BP Migas tries to be a bridge between production sharing contractors and the PLN over SLBC guarantee,? BP Migas chairman Rachmat Sudibyo said.

In order to reduce the use of oil-based fuel, according to Rachmat, PLN?s management wants to increase the use of gas as energy source in its several power plants. Nevertheless, gas producers have asked for the SLBC blanket guarantee from the PLN.

He said gas producers? request was based on the fears that the PLN couldn?t maintain its standard price of 7 U.S. cents in the post-crisis period.

?Actually, this guarantee is not the responsibility of the PLN because it has something to do with monetary problem. Still the government can?t give that guarantee,? he said.

Rachmat mentioned that the crux of the problem was regarding the amount in various SLBC requests.

?We try to bridge the gap so that both the parties can find a win-win solution,? he said.

Previously, PLN had asked Bank Indonesia not to include its SLBC guarantee for US$455 million in the calculation of the maximum credit limit (BMPK) so that it can get new credit from the banks.

With the existence of SLBC guarantee, PLN could not get any new loan, because the PLN?s credit position has become fully occupied.(*)