PEFINDO assigns “idAAA” rating to PT Indonesia Power

(August 20, 2019)--PEFINDO has assigned its “idAAA” rating to PT Indonesia Power (PT IP). The outlook for the corporate rating is “stable”.

An obligor rated idAAA has PEFINDO’s highest rating. Its capacity to meet its long-term financial commitments, relative to that of other Indonesian obligors, is superior.

The corporate rating reflects PT IP’s integrated operations and finances with its parent company, PT Perusahaan Listrik Negara (Persero) (PPLN, idAAA/Stable); its strong market position as a power generator; and the growing demand for electricity. The rating is constrained by a high reliance on funding from its Parent for sizeable capital expenditure (capex). The rating could be lowered if PEFINDO views a significant reduction in linkage with or support from the Parent.

PT IP is a power generation company fully owned by PPLN. Its main business is to produce electricity to the Parent. It also provides operation and maintenance (O&M) services for PPLN’s power plants. It manages 5 (five) Generating Units (GU) in Suralaya, Saguling, Mrica, Semarang, and Bali; 3 (three) Generating Units and Services (GGSU) in Priok, Kamojang, and Perak Grati; 13 (thirteen) Generating Service Units (GSU) throughout Indonesia; and 4 (four) power plants under subsidiaries. One subsidiary is designated as a power plant investment company, PT Putra Indotenaga, which actively has joint cooperation with other private companies to inject capital to build power plants, including PT Indo Raya Tenaga (joint controlled with PT Barito Wahana Lestari) to build coal-fired power plants (PLTU) Jawa 9-10. PT IP plans to develop 20 power plants with a total capacity of 5,662 MW.

PT IP has securitized its future flow of account receivables from Component A revenue for the five years (2017-2022) in the Suralaya coal-fired power plants units 1-4 (PLTU Suralaya units 1-4) with an asset-backed securities scheme. The value of the first phase of the securitization was IDR4.9 trillion at a value price of IDR4.0 trillion. Component A revenue is the payment made by PPLN to PT IP as a capital cost refund, which is calculated based on net capability capacity (DMN) at the level of a particular unit or power plant readiness (Equivalent Availability Factor – EAF). It consists of the depreciation cost of productive assets, corporate tax, and profit margin on production, which are stated in the tariff each year. The proceeds of the securitization were used to finance the completion of power plant projects and capital injections in several subsidiaries. (ends)