PLN to offer Rp 3 trillion in bonds

The Jakarta Post , Jakarta | Tue, 05/29/2007 8:41 AM | Business

The Jakarta Post, Jakarta

State-owned electricity company PT PLN is set to issue bonds worth Rp 3 trillion (approximately US$345 million) in July and use the proceeds to strengthen its working capital.

PLN president director Eddie Widiono said Monday the bonds would consist of conventional bonds worth Rp 2.7 trillion and sharia bonds, known as sukuk, worth Rp 300 billion.

The conventional bonds, the ninth such offering by PLN, will be divided into two series. These will be A series bonds, which will mature in 10 years and have annual interest rates of between 9.87 and 10.62 percent, and B series bonds which will mature in 15 years and have interest rates of between 10.37 and 11.12 percent per year.

The sharia bonds, representing the second such issuance, will have a maturity of 10 years and offer an annual return of between Rp 29.62 billion and Rp 31.87 billion.

Both will be on sale to the public from July 3 to 5 and will be listed on the Surabaya Stock Exchange on July 11.

To manage the bond issuance, the company has appointed four underwriters -- PT Danareksa Sekuritas, PT Mandiri Sekuritas, PT Bahana Securities and PT Trimegah Securities.

Eddie said the bond issuance was necessary as his company needed to earn more capital to finance the expansion of its electricity supply nationwide to meet increasing demands, which are expected to grow by an average of 8.5 percent per year over the next 10 years.

""This bonds issuance is part of our strategy to generate more funds to expand our business as well as to improve our services in supplying electricity nationwide,"" he said.

The company will require Rp 26.06 trillion in capital expenditure this year, comprising Rp 14.1 trillion for power plant construction, Rp 7.2 trillion for electricity transmission and the remaining funds for electricity distribution.

The company's electricity sales have been projected to reach 122,951 gigawatt hours (GWh) from 112,610 GWh last year, with its revenue increasing by 10.7 percent to Rp 78.3 trillion from Rp 70.7 trillion last year. Its operational income has been projected to increase by 5.5 percent to Rp 110.5 trillion from Rp 104.7 trillion.

In 2005 the company recorded losses of Rp 1.9 trillion, a sharp drop from the Rp 4.9 trillion in losses it booked a year earlier.

The company supplies only 55 percent of households in the country with electricity at the present time. However, by 2015 it is expected PLN will supply 76 percent of households in Indonesia with electricity.

Eddie said the company is still receiving complaints concerning electricity shortages in many areas across the country.

To help overcome such problems, the government launched the so-called ""crash program"" last year to provide additional supplies of 10,000 megawatts (MW) of power to the nation's power grid by 2009 using coal as the energy source.

At the end of last year, PLN's generation capacity stood at 21,815 MW, being equipped with 32,844 kilometers of transmission lines and 597,257 kilometers of distribution lines. (04)

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