Chinese banks withhold loan for PLN because Merpati cancels aircraft purchase
Tuesday, February 24 2009 - 02:49 AM WIB
Energy and Mineral Resources Purnomo Yusgiantoro said Monday that the Merpati contract problem could delay the state power firm?s 10,000 MW crash program, which largely depends on finance from Chinese banks.
Purnomo told House of Representatives (DPR) Commission VII that the banks - the Bank of China, the China Development Bank and the China Export Import Bank - wanted the Indonesian government to help settle the Merpati Xi?an dispute before releasing all disbursements of loans agreed with PLN.
?It?s like the loan commitment is being held ?hostage?,? he said.
In 2006, Merpati signed a contract with Xi?an for the purchase of 15 Xinzhou-60 aircraft at $15 million each, using a soft-loan scheme from the China Export Import Bank.
After the delivery of two aircraft in 2008, Merpati failed to honor its part of the contract due to financial troubles, leading to a halt in the delivery of the remaining aircraft.
Purnomo said that the Chinese investors were using Merpati?s failure as a reason to suspend the disbursement of loans already agreed under the 10,000 MW program.
The Chinese banks have now said they want higher loan interest rates than those agreed last year and have meanwhile only partially disbursed the US$ 1.48 billion of agreed loans.
The energy and mineral resources ministry has assigned a team to renegotiate the 10,000 MW loan deal with China, on the interest terms and, rate of disbursements, while clarifying the Merpati issue.
?We want to clarify whether the Merpati-Xi?an contract dispute is really the reason behind the funding problems for our 10,000 MW program. We hope this is not true,? Purnorno added.
The State Ministry of State Enterprises has also set up a team, led by Sahala Lumban Gaol one of the deputies to the minister to renegotiate the Merpati Xi?an aircraft contract, but little progress has been made on this so far. (*)