Govt agrees to fully guarantee 10,000 MW project

The government has decided to fully guarantee all of the financial risks related to the state electricity company’s (PLN) coal-fired power plant projects aimed to provide additional power supply of 10,000 Megawatt.

 

Minister of Finance Sri Mulyani Indrawati said in Jakarta Monday that the government’s guarantee would only be given to the 10,000 MW program, not for independent power producers (IPP).

 

According to the Finance Minster, with the government’s move to guarantee the 10,000 MW project, the presidential regulation No. 86, 2006 should be amended to reflect the new policy. “If the presidential regulation is amended, then the finance ministerial regulation and other regulations have also to be amended,” she said.

 

Under the finance ministerial regulation issued earlier, the government would only guarantee the 10,000 MW project on the condition that PLN is incapable of paying the loan.

 

Sri Mulyani expressed the hope that there should be a new financing scheme that would allow for lower prices and low risk in regards to the project due to the government’s involvement in the project.

 

Meanwhile, PLN’s president director Eddie Widiono said that the company was ready to use its assets as a collateral if Chinese investors who win the bid for the construction of Pacitan, Teluk Naga, and Pelabuhan Ratu coal-fired power plants face financial constraints.

 

PLN is ready to prepare alternative financing raised through bond issuance, direct borrowing from financial institutions and export credit. (godang)