Global credit crisis threatens PLN?s power projects
Thursday, October 9 2008 - 02:30 AM WIB
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta on Wednesday that the global credit crisis might affect power projects to be built outside Java, for which PLN expected financing from local banks.
The credit crisis has pushed domestic inflation higher and forced the central bank to raise interest rate. This results in higher loan costs for the projects.
?Power plants to be built outside Java have smaller production capacity (compared to those to be built on Java). These projects are financed by local funds,? he said. Large power projects to be built in Java would not be affected by the global credit crisis because they had secured loan commitment from foreign financial institutions mostly from China, he said.
He said in order to solve the problem, Minister of Finance Sri Mulyani Indrawati was seeking to find alternative funds from China and Middle East. Last month, Indonesia received offers from IDB and Qatar Investment to finance the projects.
?Given the situation, the efforts to raise funds from the Middle East will be intensified," he said.
PLN is undertaking an ambitious project to build 35 coal-fired power plants across the country to provide additional power supply of about 10,000 megawatt by 2010.
Some of the new power plants are expected to begin operation at the end of 2009.
PLN?s finance director Setio Anggoro Dewo said that PLN would need up to US$4.4 billion in foreign funds and Rp 17.5 trillion in local funds and to build the 35 power plants.
He said that the state electricity company had received loan commitment of $3 billion from foreign funders and Rp 13.5 trillion in local funds for the power projects. ?PLN hopes it will be able to find additional funds from China to meet the funding shortage,? he said. (*)