JAKARTA (TheInsiderStories) – State power producer PT Perusahaan Listrik Negara (PLN) targets to raise Rp10 trillion fund through assets securitization or asset-based security investment contract with underlying seven coal-fired power plants in Suralaya, owned by PT Indonesia Power. The securitization program is scheduled for August this year.
The fund will be used to finance the construction of PLTU projects owned by Indonesia Power. PLN said, the PLTU projects are PLTU Suralaya (2×1,000 MW), Mobile Power Plant, PLTU Kaltim 3, and PLTU Jambi (2×300 MW). PLN is assigned by the Government to develop the electricity infrastructure in all regions across the country. PLN is said to seek Rp100 trillion fund this year for developing electricity infrastructure. It has earlier issued global bonds worth US$2 billion.
PLN has some options of funding such as bond issue, bank loan, subsidiary loan agreement, loan to export credit agency, and private electricity firms. As loan to bank would be capped by the maximum lending limit policy, PLN also opts to transforming its financial assets into securitized security.
“The existing funding options have constraints, then PLN needs to expand its sources of funding. One option is to securitize assets or called as the collective investment contract of asset-based security (KIK-EBA),” said Sarwono Sudarto, PLN’s finance director.
He explained that the EBA is an instrument on which PLN converts the future income into financial assets for gaining cash in front. Sarwono added that the basis of securitization is the future cash flow from income of Indonesia Power. The receivables of Indonesia Power Unit Bisnis Pembangkitan (UBP) Suralaya, he said, are the underlying assets for this investment.
PLTU Suralaya has capacity of 3,400 megawatts (MW) and contributes around 12% to Java-Bali system. PLTU Suralaya still offers 20 years of benefits period and has excellent operation performance. PLN itself has expected-revenue stream of about Rp300 trillion per year, to be utilized as guarantee for the investment contract. PLN could earn Rp12 trillion per year from PLTU Suralaya. PLN expects to earn Rp2.5 trillion per year from selling Suralaya’s future income through KIK-EBA instrument.
Sarwono claimed that investing in KIK-EBA instrument would be more attractive as it offers lower risk. “The power machines have been available and the power purchase and sale has been secured with PLN where some Rp10 trillion could be reinvested in the long term contract within next five years,” he explained.
The investment through KIK-EBA will not result in the transfer of fixed assets or ownership. The Government keeps its fully ownership in PLN, and PLN remains fully controlling Indonesia Power.