JAKARTA (TheInsiderStories) – Three state owned banks, PT Bank Rakyat Indonesia Tbk (IDX: BBRI), PT Bank Mandiri Tbk (IDX: BMRI) and PT Bank Negara Indonesia Tbk (IDX: BBNI) provide syndicated loan worth Rp27 trillion (US$2.05 billion) and treasury line of $950 million for PT Perusahaan Listrik Negara (PLN) to support the government’s ambitious 35,000 megawatt (MW) power plant program.
Off this loan, amounting to Rp 15 trillion will be allocated for working capital loan, non cash loan facility amounting to Rp 12 trillion will be used to assist the procurement of the company and business group and treasury line facility of $950 million will be used to pay foreign currency loans and hedging requirements on foreign currency liabilities in accordance with Bank Indonesia ruling (PBI) No. 16/21/PBI/2014.
“PLN should pursue the development of electricity infrastructure in order to cover the electricity needs in 2019, “said PLN President Director Sofyan Basir at the signing ceremony on June 29.
In a move to speed up the development of its massive power plant development program, President Joko Widodo has issued sets of regulations to give legal protection to policymakers responsible for the construction of power plants in Indonesia.
The regulations would also address issues such as business permits and land procurement processes, while at the same time giving a mandate to regional governments to support the projects. Over the past years, power plant project developments have been slow due to land clearing-related issues.
The presidential decree complements regulations issued by the Energy and Mineral Resources Ministry in January 2015 that allows direct appointments of investors with established track records in constructing power plants.
Energy and Mineral Resources Minister Sudirman Said stated that the projects were so far on schedule. From the total 212 new power plants project, he said, at least 19 percent had entered the construction phase and at least 100 had completed their land procurement process.
Minister Sudirman added that the country needs to increase its electricity capacity by at least 7,000 MW a year to meet annual demand for electricity of 7-8 percent per annum. For 35,000 MW projects, at least 10,000 MW on the first phase of construction will be supervised by state-owned electricity company PT Perusahaan Listrik Negara (PLN).
Total investment in the power plants and their supporting electricity infrastructure is estimated at Rp 200 trillion (US$15.04 billion), to be shared between PLN and independent power producers (IPPs).