PLN proposes to swap dollar loans for China's Yuan
State power firm PT PLN will propose to swap its dollar-denominated loans from Chinese banks to yuan to help reduce foreign exchange costs. The loans to be renegotiated are part of the company's loans to finance its ambitious 10,000 megawatt electricity project, PLN's president director Fahmi Mochtar said on Friday. Chinese banks have so far signed financing commitments for a total of US$1.47 billion, most of which will be used to pay Chinese suppliers and contractors.
If the swap proposal goes ahead, PLN will get the loans in yuan and also pay its Chinese partners in yuan. "From tenders we have held, many of the winners are from China. But, the contracts were made in US dollars. The Finance Ministry has suggested to us to directly use China's own currency, the Yuan, instead of dollars to avoid (burdens from) double currencies
The 10,000 megawatt project needs a total of Rp 19.2 trillion and US$4.8 million. Of these required funds, PLN has so far secured Rp 18.8 trillion and $2.18 million. We need to sit together with Chinese banks to discuss this further
PLN's plan to renegotiate the loans came after Finance Ministry Sri Mulyani Indrawati urged the company to utilize a recent bilateral currency swap agreement signed between Indonesia and China. The two countries have recently agreed to swap Rp 175 trillion or 100 billion yuan (about $15 billion) to lessen exposure to the US dollar, according to the cental bank. I ask PLN directors to sit (and talk) again with Chinese creditors to re-discuss their agreement. It will reduce the exposure (of rupiah to dollar)
Rupiah depreciation increased PLN's net losses from Rp 5.60 trillion in 2007 to Rp 12.3 trillion in 2008. Foreign exchange losses contributed about Rp 9.3 trillion to last year's net losses, the company announced last week.
PLN's finance director Setio Anggoro Dewo said the net losses were not actual cash losses to PLN, because its foreign-denominated loans are not yet mature. PLN is now looking for banks to assist the company with debt hedging arangements.
The 10,000 MW program covers the construction of 35 power plants, 10 of them in Java and Bali, with 25 located off the two main islands. So far contracts for 32 power plants have been signed, and most of these have now reached the construction phase. About 7,000 megawatts are scheduled to start operating in 2010, while the remaining 3,000 megawatts are delayed until 2011 and 2012.To anticipate increasing electricity demand, the government has been also been preparing a second 10,000 MW accelerated program, part of which will be directly PLN's responsibility, while the rest will be financed and managed by independent power producers (IPPs).
Source:Alfian and Aditya Suharmoko , The Jakarta Post , Jakarta
State power firm PT PLN will propose to swap its dollar-denominated loans from Chinese banks to yuan to help reduce foreign exchange costs. The loans to be renegotiated are part of the company's loans to finance its ambitious 10,000 megawatt electricity project, PLN's president director Fahmi Mochtar said on Friday. Chinese banks have so far signed financing commitments for a total of US$1.47 billion, most of which will be used to pay Chinese suppliers and contractors.
If the swap proposal goes ahead, PLN will get the loans in yuan and also pay its Chinese partners in yuan. "From tenders we have held, many of the winners are from China. But, the contracts were made in US dollars. The Finance Ministry has suggested to us to directly use China's own currency, the Yuan, instead of dollars to avoid (burdens from) double currencies
The 10,000 megawatt project needs a total of Rp 19.2 trillion and US$4.8 million. Of these required funds, PLN has so far secured Rp 18.8 trillion and $2.18 million. We need to sit together with Chinese banks to discuss this further
PLN's plan to renegotiate the loans came after Finance Ministry Sri Mulyani Indrawati urged the company to utilize a recent bilateral currency swap agreement signed between Indonesia and China. The two countries have recently agreed to swap Rp 175 trillion or 100 billion yuan (about $15 billion) to lessen exposure to the US dollar, according to the cental bank. I ask PLN directors to sit (and talk) again with Chinese creditors to re-discuss their agreement. It will reduce the exposure (of rupiah to dollar)
Rupiah depreciation increased PLN's net losses from Rp 5.60 trillion in 2007 to Rp 12.3 trillion in 2008. Foreign exchange losses contributed about Rp 9.3 trillion to last year's net losses, the company announced last week.
PLN's finance director Setio Anggoro Dewo said the net losses were not actual cash losses to PLN, because its foreign-denominated loans are not yet mature. PLN is now looking for banks to assist the company with debt hedging arangements.
The 10,000 MW program covers the construction of 35 power plants, 10 of them in Java and Bali, with 25 located off the two main islands. So far contracts for 32 power plants have been signed, and most of these have now reached the construction phase. About 7,000 megawatts are scheduled to start operating in 2010, while the remaining 3,000 megawatts are delayed until 2011 and 2012.To anticipate increasing electricity demand, the government has been also been preparing a second 10,000 MW accelerated program, part of which will be directly PLN's responsibility, while the rest will be financed and managed by independent power producers (IPPs).
Source:Alfian and Aditya Suharmoko , The Jakarta Post , Jakarta
