PLN to seek funds from other sources for 10,000 MW fast track program
Thursday, October 11 2007 - 02:39 AM WIB
Uncertainties over loans promised by Chinese banks to fund the 10,000 MW government’s fast track program has prompted the state electricity firm PT Perusahaan Listrik Negara (PLN) to seek funds from other sources, Kompas reported Thursday.
PLN’s director Eddie Widiono said in
Eddie cited China Exim Bank as an example, saying that China Exim Bank has earlier committed to funding the construction of the Suralaya and Paiton coal-fired power plants but up till now, the bank had yet to inform proposed loan interest.
As the consequence of the uncertainty, around 85 percent of the total Rp 76 trillion funds, or Rp 65 trillion, needed for the 10,000 MW projects would have to be sought from other financial institutions.
Eddie is optimistic that the loan problem would be solved in the first quarter of 2008. “By that time, the bridging funds spent by PLN will reach 15 percent of the required funds,” Eddie said.
According to Eddie, at least 20 financial institutions are eligible to take part in the tender to fund the projects. “The bidding proposal is in progress,” he said.
PLN expects that the loan interest will be lower than that of international bonds. The bond interest rate issued earlier by PLN was between 7.25 and 7.8 percent.
Last year, Indonesia and China signed a memorandum on understanding (MoU) on the funding of the power project during Vice President Jusuf Kalla’s visit to the country following a tender for the construction of 10 coal-fired power plants in Java under the government’s fast track program.
Out of the 10 coal-fired power plant construction projects tendered in March 2006, eight have been won by Chinese contractors. "The construction of the power plant projects have started but funding problem with Chinese banking has yet to be solved," Eddie said.
Eddie asserted that with the government's decision to give full guarantee for the project as demanded by Chinese contractors, opportunities are open to get loan with low interest rate from other financial institutions, not only from Chinese banking. (*)