PLN seeks new bank loans worth Rp 50t

State-owned electricity firm PT PLN hopes to be able to raise up to Rp 50.1 trillion of loans from banks by the end of this year, Bisnis Indonesia reported on Monday.

The paper quoted PLN Spokesman I Made Suprateka as saying that the utility firm is expected to hold talks with a number of banks soon to get the borrowing.

The new borrowing is part of PLN?s plan to raise a total of Rp 585 trillion worth of funds to help finance the development of 10,000 MW power plants and transmission lines.

The company has already obtained loans worth Rp 117 trillion. Aside from the planned Rp 50.1 trillion bank loans this year, the company will need to raise another Rp 349.6 trillion in the period of 2018-2021, the paper said.

The planned new borrowing comes following recent warning from the Ministry of Finance (MoF) over PLN?s financial condition as the company will have to repay rising volume of maturing debts in the next few years, which will undermine its finances especially as its electricity sales have been below target due to weaker demand amid slower economic growth, and as the government has banned PLN from raising its electricity tariff. The MoF has advised the government and PLN to delay or reschedule some of the power plant projects under the 35,000 MW program.

But PLN insisted it has the capacity to finance the projects including by raising new loans, and assured that it would not default paying its debts. (*)