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UPDATE 1-Indonesia's PLN gets $1.6 bln loan for giant power station project

Published 06/11/2018, 06:25 pm
Updated 06/11/2018, 06:30 pm
UPDATE 1-Indonesia's PLN gets $1.6 bln loan for giant power station project
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* Loan raised after $1.5 bln global bonds issued

* PLN posted 18.48 trillion rupiah loss in Jan-Sep

* Firm to receive capital injection from govt next year (Adds company comment, background details)

By Bernadette Christina Munthe

JAKARTA, Nov 6 (Reuters) - Indonesia's state-owned power utility Perusahaan Listrik Negara (PLN) said it has secured a $1.62 billion syndicated loan facility to support its role in the country's ambitious 35 gigawatt power station development programme.

The offshore U.S. dollar credit facility with 20 international banks, signed on Oct. 25, was the first of its kind for PLN, the company said in a statement issued on Monday.

"We see this as strong proof that PLN and Indonesia's credit profile is very good," PLN finance director Sarwono Sudarto said.

Australia and New Zealand Banking Group Ltd, Bank of China (Hong Kong) Ltd, Citigroup (NYSE:C) Global Markets Singapore Pte. Ltd., Mizuho Bank Ltd, Oversea-Chinese Banking Corporation Ltd, Sumitomo Mitsui Banking Corp Singapore Branch, and United Overseas Bank Ltd were the lead arrangers and bookrunners.

The new loan facility follows the issuance of around $1.5 billion in 7, 10 and 30-year global bonds in U.S. dollar and euro denominations by PLN in mid-October.

"This shows that overseas financial institutions are very interested in Indonesian infrastructure projects, especially in electricity," PLN spokesman I Made Suprateka told Reuters by text message on Tuesday.

PLN has an investment-grade credit rating of Baa2 from Moody's and BBB- from Standard & Poors ratings agencies, ratings that are equivalent to Indonesia's sovereign credit ratings in each case and reflect the firm's state-owned status.

According to the Organisation for Economic Cooperation and Development (OECD), however, debt taken on by PLN and other Indonesian state-owned companies to finance infrastructure projects could expose them to cash flow constraints, "particularly if interest rates increase or projects are delayed".

This, in turn, could result in higher fiscal risks for the government, it said in a report last month. reported a net loss of 18.48 trillion rupiah ($1.24 billion) for the January-September period, compared to a profit of 3.04 trillion rupiah in the same period a year earlier, according to a financial statement published in late October.

The earnings showed a nearly 20 percent increase in fuel and lubricant costs in that period, a 13 percent increase in power purchase costs and a near seven-fold increase in foreign exchange losses.

PLN is expected to receive a 6.5 trillion rupiah injection from the government in 2019, part of government efforts to shield the company from the impact of a currency slide - the rupiah IDR=ID has weakened around 8.6 percent this year. government's decision not to raise power tariffs until 2019 has also hurt PLN, as coal prices have climbed significantly this year.

The last year for which PLN reported a net loss was in 2013. That year it posted a 26.23 trillion rupiah loss that the company attributed to a 21 percent plunge in the rupiah's value, according to its financial statements.

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