MoF provides guarantee for power projects
Wednesday, September 3 2014 - 01:25 AM WIB
The Ministry of Finance (MoF) has issued a new regulation on the procedure to provide guarantee for gas, coal, and renewable energy-based power plant projects developed by private companies in cooperation with state-owned electricity firm PLN, the ministry said in a statement Tuesday.
In a bid to help accelerate power sector development particularly which are based on the aforementioned three types of fuel, the government has invited private investors to team with state-owned electricity firm PLN, in which the latter would purchase the electricity from the power plant projects. The private investors, however, have demanded the government to provide guarantee to assure that PLN can perform its financial obligation in a bid to minimize risk.
According to the new Minister of Finance Regulation No 173/PMK.001/2014, the Minister of Finance will sign the so-called feasibility guarantee for PLN.
?The feasibility guarantee is a government guarantee on the ability of PLN to fulfill its financial obligation in case a default of payment or termination occurs,? the ministry said in the statement. ?The guarantee will be stated in a letter signed by the Minister of Finance to the private power developers.?
Editing by Reiner Simanjuntak