PEFINDO: “idAAA” rating for PT Indonesia Power

(September 23, 2021)--PEFINDO has assigned its “idAAA” rating to PT Indonesia Power (Indonesia Power). The outlook for the corporate rating is “stable”.

An obligor rated idAAA has the highest rating assigned by PEFINDO. Its capacity to meet its long-term financial commitments, relative to those of other Indonesian obligors, is superior.

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

Indonesia Power is a power generation company fully owned by PPLN. Its main business is to produce and supply electricity to the Parent. It also provides operation and maintenance (O&M) services for PPLN’s power plants. As of June 2021, it managed power plants, with a total installed capacity of 17,234 megawatts (MW), located in various areas across Indonesia, including Suralaya, Priok, Kamojang, Saguling, Mrica, Semarang, Grati, Bali, Barru, and Sorong. It also owns four power plants under subsidiaries and joint ventures. PT Putra Indotenaga, a subsidiary investment company, is an active joint cooperation with other private companies to build power plants, including PT GCL Indo Tenaga owning 2x100 MW, PT Rajamandala Electric Power, owning 1x47 MW, and PT Indo Raya Tenaga (jointly controlled with PT Barito Wahana Lestari) to build PLTU Jawa 9-10. In the future, it plans to develop 15 power plants with a total capacity of 3,850 MW and also initiate to develop renewable project with a total capacity of more than 970 MW until 2025.

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