ASEAN KEY DESTINATIONS
Germany offers $2b to state-run infrastructure projects
European economic powerhouse Germany is offering a US$2 billion-credit facility for a number of state-owned enterprises, including state electricity firm PLN, to back the government’s ambitious infrastructure projects.
“We’ve talked [with our German counterparts] and they are offering a $2 billion-credit facility,” State-Owned Enterprises Minister Rini Soemarno said recently, without disclosing the names of the creditors.
PLN already signed a $300 million-loan facility agreement, part of the credit facility, to support its power plant projects, she said.
The Jakarta Post contacted PLN but did not receive any comment.
Under the administration of President Joko “Jokowi” Widodo, the government aims to build 109 power plants nationwide with a total capacity of 35,000 megawatts (MW).
To contribute to these 35,000 MW, PLN is planning to develop a power plant with a capacity of 10,000 MW. The remaining 25,000 MW will be developed by independent power producers (IPPs).
The number of power plants developed by IPPs is greater than the portion developed by PLN, since the state-run firm does not have enough funding to finance all of the projects, estimated to cost Rp 814 trillion ($61.6 billion).
Aside from the German loan facility, PLN is set to receive a Rp 5 trillion state capital injection this year.
The firm has previously stated that the capital injection will be used to accelerate its 10,000 MW power plant project.
Rini said the government was trying to convince German creditors to channel part of the loan facility to other state-owned enterprises.
“We’re discussing the possibility of getting a credit facility for state-run shipping company PT Pelni to help the firm procure a new shipping fleet,” she went on.
On May 21, state-run steel giant Krakatau Steel signed a $260.05 million-loan facility with Frankfurt-based Commerzbank AG with support from the German Export Credit Agency (ECA).
Krakatau Steel will use the loan to finance its second hot strip mill project in Cilegon, Banten.
“We’re targeting our hot rolled coil production to stand at 3.9 million tons in 2017 by the time the new factory starts operating,” Krakatau Steel corporate secretary Iip Arief Budiman said, referring to a figure that is more than double the firm’s current hot rolled coil output of 1.5 million tons.
Iip said that he was upbeat that demand for steel would continue surging, especially with the government’s giant infrastructure projects kicking off.
Domestic steel production hits only around 4 million tons per year, below the country’s total demand for steel that stood at around 13 million tons last year, according to data from the Southeast Asia Iron and Steel Institute (SEAISI) and Krakatau Steel.
In another related development, the government secured a commitment from China for a Rp 50 trillion-facility to support its infrastructure projects.
Rini said previously that the China Development Bank (CDB) and the Industrial and Commercial Bank of China (ICBC) had expressed their commitments to become the standby subscribers for the planned Rp 50 trillion bonds to be issued by a number of state construction firms.
The funds raised would be mainly used to finance various infrastructure projects.
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