Private electricity investors threaten to withdraw from Indonesia
Wednesday, February 14 2001 - 04:30 AM WIB
Foreign creditors who have financed independent power producers (IPP) projects in Indonesia have threatened to leave Indonesia and relocate their investment into other countries if negotiation with state electricity company PT Perusahaan Listrik Negara (PLN) do not bear fruits.
They expressed their threat at a meeting with the government-appointed electricity restructuring team, dubbed as the presidential decree 133/2000 team, in the office of the National Development Planning Agency (Bappenas) in Jakarta on Tuesday evening (Feb. 13).
Minister of Energy and Mineral Resources Purnomo Yusgiantoro, also deputy chairman of the team, said that those creditors would continue their investment in Indonesia electricity industry only if the investment climate became conducive.
"They also said that they would relocate their investment to other countries that are more attractive for investment.
"We are not surprised with that kind of statement because that is a true statement. But, of course, we will try our best so that the trust given to us will not be transferred to other countries," Purnomo said.
He said the creditors did not give detail case by case that they faced with PLN. But they made it clear that they did not want to lose money by investing in Indonesia.
He also noted that the creditors also asked the government to fully support PLN in its negotiation with private electricity producers.
On hand at Tuesday's meeting included representatives from US Exim Bank, OPIC (Overseas Private Insurance Corporation), ERG Swiss, METI, EID, JBIC from Japan, Hermes from Jerman, the World Bank and the Asian Development Bank.
With that meeting, Purnomo said members of the presidential decree 133/2000 team agreed to save PLN, namely by swapping PLN debt to the government of Rp 21 trillion into equity, and gradually increasing electricity tariffs.
But the government would demand PLN's seriousness in pursuing restructuring. "The government will ask PLN to present a business plan that shows when PLN would recover and when electricity tariffs could be raised."
He noted that the government would continue to rely on foreign investors to finance electricity investment in the country in the coming years due to the government's budget constraint. (*)