PT Perusahaan Listrik Negara (PLN) posted a net profit of Rp10.84 trillion(US$774.28 million) in the third quarter (3Q) of 2019 - Photo by the Company

JAKARTA (TheInsiderStories) –  Indonesia’ state-owned power producer, PT Perusahaan Listrik Negara (PLN) announced that it had issued global bonds worth US$1.4 billion on July 10. The funds use to construct of additional generating, transmission and distribution capacity in the 35 thousand Megawatt (MW) program to be completed by 2024.

Last year, PLN has issued global bonds worth $1.5 billion. The global bond is issued in two currencies at once, namely the American dollar and the Euro.

“PLN has succeeded in utilizing market momentum so that the global bond this time will not only experience excess demand but also get a very competitive interest rate,” said PLN Finance Director Sarwono Sudarto in an official statement in Jakarta, Monday (07/15).

The bonds were issued in two tenors, $700 million bonds with 10-year tenor with coupon rate at 3.875 percent and $700 million bonds with 30-year tenor have a coupon rate 4.875 percent, respectively. This is the lowest rate of US dollar-denominated bonds for 10 and 30 years for state-owned enterprises (SOEs), the company said.

Sudarto added, beside use the funds to build additional generating, transmission and distribution capacity in the 35.000 MW program, PLN also continues to develop small power plants, from new and renewable energy, solar panels and diesel for remote and isolated areas throughout Indonesia.

Since July 4, the company has conducted a roadshow for the global bond issuance to Hong Kong, Singapore, the United Kingdom, and the US. Three international rating institutions, namely Moody’s Rating, S&P Global Ratings, and Fitch Ratings, provided an assessment of the quality of the bonds’ credit with Baa2, BBB and BBB rating levels, is equivalent to the Indonesian government’ credit rating.

The company’ experienced more than 4.42 times demands. The book-building process and the price is carried out on July 10. The company received order mostly from the US, Europe, and Asia. The majority of these types of investors are asset managers, insurance, pension funds, and international banking.

The bond transaction settlement process is expected to occur on July 17 and to be listed at the Singapore Stock Exchange (SGX).

PLN assisted by several financial institutions and international banks, including ANZ, BNP Paribas, Citigroup, HSBC, Mandiri Securities, and Standard Chartered Bank. In addition, helped by co-managers from Indonesia such as PT Bahana Securities, PT BNI Sekuritas, and PT Danareksa Sekuritas.

This year, Perusahaan Listrik Negara targeting to operate six power plants in this year. The plants will have a capacity 4,000 megawatts (MW), said the chief executive last week.

With the operation of the six power plants, is estimating the power producer will have a capacity 66,565 MW. The six power plants to be operated consisted of four steam power plants and two hydroelectric power plants.

The first power plant is Java 7 and Cilacap power plant which has a capacity of around 1,000 MW, each. Then, Lontar power plant with total capacity 315 MW and coal-fired power plant Gati with 450 MW capacity.

The two hydro-power plants are located in Jatigede, West Java, with a capacity of 2×55 MW and Rajamandala power plant in Cimahi, West Java with a capacity of 47 MW. However, he said, the six power plants would not operate at the same time because it were still consolidating with the Ministry of Energy and Mineral Resources (MEMR).

The growth of industrial electricity needs in 2019 will increases. With the addition of six new power plants, its expected can be determined the fulfillment of electricity needs of the society and industry.

This is similar with the target of the MEMR, which plans to add the installed capacity of the power plant in 2019 amounting to 3,976 MW, where the realization of installed capacity in 2018 is 62,589.71 MW.

The government would indeed increase the national average electricity consumption by 1,200 kilowatt per hour (kWh) per capita, up from the realization in 2018 which amounted to 1,064 kWh per capita. This figure is relatively small compared to neighboring countries like Malaysia and Singapore.

Last year, the realization 1.064 kWh per capita and was still far away from Malaysia 4.000 kWh per capita and Singapore 8,000 kWh per capita.

PLN plans to provide Rp90 trillion (US$6.42 billion) investment in 2019, mostly for the 35 Gigawatt projects. The funds would later be obtained by the power producer from the company’ equity and third party funding. PLN also opened the option to re-issue bonds and local bonds to be able to meet this investment need.

Indonesian President Joko Widodo himself admitted that there were around 1.2 million homes that did not have access to electricity in all of Indonesia. Expected, by this six plants operation, people will enjoy electricity as a whole slowly.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com