PLN obtains hedging facility

State-owned electricity company PT. Perusahaan Listrik Negara (PLN) signed on Friday a foreign exchange (forex) line for hedging purposes with three state-controlled banks including Bank Mandiri, Bank BNI, and Bank BRI.

PLN President Director Sofyan Basir said in a statement that the company needs the hedging facility due to its huge requirement of foreign currency for purchase of fuel such as gas and geothermal, and electricity from independent power producers. Meanwhile, the company obtains revenue in rupiah.

Given the fluctuation in the value of the rupiah against the US dollar, the company needs hedging facility to help prevent cash flow mismatch.

PLN did not disclose the size of the forex line facility, but Bisnis Indonesia reported that the facility is worth US$950 million, of which $500 million to be provided by Bank Mandiri.

Editing by Reiner Simanjuntak