PLN is looking for more funds to improve its electricity distribution network in the Java-Bali area

PLN gets funds from AFD, seeks more
Aditya Suharmoko, The Jakarta Post, Jakarta | Fri, 06/04/2010 12:02 PM | Business


State power firm PT PLN is looking for more funds to improve its electricity distribution network in the Java-Bali area and electricity transmission projects in the Java-Sumatra area, an official says.

On Thursday, PLN received a US$50 million loan from the French Development Agency (AFD) to finance the Java-Bali distribution network. PLN was represented by the Finance Ministry’s directorate general of debt management.

PLN is looking to receive another $50 million in loan from the Asian Development Bank and will self-finance $19 million to improve the distribution network to minimize losses in electricity distribution.

An electric distribution network is a system of cables that delivers electric power from its point of generation to end users. The improvement is expected to finish in mid-2012.

Maurin Sitorus, director of foreign loans and grants at the directorate general of debt management, said PLN would receive $220 million in loans from the World Bank for the improvement of the Java-Bali distribution network.

“We have made technical negotiations. We’re just waiting for approval from the PLN commissioners and state-owned enterprises minister. When it’s approved, we’ll sign it,” he said.

He added that the World Bank loan would mature in 24.5 years, with an interest of LIBOR (London Interbank Offered Rate) plus 24 basis points (or 0.24 percent). LIBOR now stands at about 0.45 percent.

There is no commitment fee for the loan, but there is an upfront fee of 0.25 percent paid in advance, said Maurin.

PLN has embarked on two ambitious 10,000-megawatt projects to provide electricity nationwide.
Blackouts are frequent in Indonesia, which businesses say causes them losses.

Maurin also said the Japan International Cooperation Agency might provide $320 million in loans to finance the Java-Sumatra transmission project. “But it’s still in the process,” he said.

Loans provided to PLN are part of project loans, according to the latest data from the directorate general of debt management.

As of April 30, government institutions had received $527 million in project loans, or 21.7 percent of the $2.67 billion allocated in the 2010 state budget revision, the data showed.