Posted by: mel | February 2, 2009

Indonesia state power firm PLN seeks $2.5 bln loan

By Muklis Ali 

JAKARTA, Jan 30 (Reuters) – Indonesian state power firm PT Perusahaan Listrik Negara (PLN) is seeking a further $2.5 billion in loans to build power projects, its chief said on Friday, amid surging power demand in Southeast Asia’s biggest economy.

The firm did not elaborate on how it would secure the funds during a global credit crisis when many major commercial banks worldwide are struggling with non-performing loans.

It signed a $380 million syndicated loan deal on Friday, but all of the lenders were local state-controlled banks.

Including Friday’s signing, the firm has secured a total of $5.5 billion in funds for a 10,000 megawatt coal-fired project. A significant amount of the funding has come from Chinese lenders, it said.

“The projects will cost around $8 billion in total,” PLN’s president director Fahmi Mochtar told reporters, referring to the 10,000 MW coal-fired projects. “We have signed $5.5 billion in loan deals and we are now seeking (the remaining) $2.5 billion.”

PLN, the monopoly power supplier in Indonesia, has 25,000 MW of generating capacity but daily output is far smaller because most of its plants are old and inefficient.

Some of the 10,000 MW coal-power projects are expected to come on stream in March this year and the whole project is due to be concluded in 2011.

“We are seeking to obtain loans from local banks as well as from international banks, including from China,” Mochtar said.

With many global banks struggling with their own troubled assets, PLN may have to rely more on local lenders.

On Friday, Pertamina signed a total of 4.3 trillion rupiah ($380.2 million) in syndicated loans with local lenders to finance a combined 1,320 megawatts (MW) of power projects in various parts of the country.

The lenders included state-controlled PT Bank Negara Indonesia Tbk (BNI) (BBNI.JK) and PT Bank Rakyat Indonesia Tbk (BBRI.JK)

“Today’s signing offers a good indication for PLN to continue obtaining funds for its projects,” Finance Minister Sri Mulyani Indrawati said, without elaborating.

As domestic power demand continues to grow, PLN’s Mochtar said the company may not move to cut electricity tariffs despite lower fuel prices, noting that its selling prices to retail customers were still below its electricity production costs.

PLN, however, has cut electricity tariffs for industries in line with government policy to boost the economy.

Industry officials forecast Indonesia’s power demand will grow around 10 percent a year. Indonesia frequently suffers blackouts as its power grid has a power margin reserve of only about 20 percent, instead of 30 percent to secure supplies. ($1=11,310 rupiah) (Reporting by Muklis Ali; Editing by Gde Anugrah Arka and Ben Tan)

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