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Merpati row may delay PLN 10,000 MW program
A contract row between state airline PT Merpati Nusantara and China’s Xi’an Aircraft Industry may cause delays for a key PLN energy program
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A contract row between state airline PT Merpati Nusantara and China’s Xi’an Aircraft Industry may cause delays for a key PLN energy program.
Energy and Mineral Resources Purnomo Yusgiantoro said Monday that the Merpati contract problem could delay the state power firm’s 10,000 MW crash program, which largely depends on finance from Chinese banks.
Purnomo told House of Representatives (DPR) Commission VII that the banks — the Bank of
China, the China Development Bank and the China Export Import Bank — wanted the Indonesian government to help settle the Merpati-Xi’an dispute before releasing all disbursements of loans agreed with PLN.
“It’s like the loan commitment is being held ‘hostage’,” he said.
In 2006, Merpati signed a contract with Xi’an for the purchase of 15 Xinzhou-60 aircraft at $15 million each, using a soft-loan scheme from the China Export Import Bank.
After the delivery of two aircraft in 2008, Merpati failed to honor its part of the contract due to
financial troubles, leading to a halt in the delivery of the remaining aircraft.
Purnomo said that the Chinese investors were using Merpati’s failure as a reason to suspend the disbursement of loans already agreed under the 10,000 MW program.
The 10,000 MW power program was launched in 2006 to meet the increasing electricity needs across the nation, especially for the Java-Bali system, where demand has been increasing at an average rate of nearly 7 percent per year.
The Chinese banks have now said they want higher loan interest rates than those agreed last year and have meanwhile only partially disbursed the US$ 1.48 billion of agreed loans.
He said this could potentially lead to both countries having to take recourse in international arbitration, while adding that “this suddenly becomes political”.
The energy and mineral resources ministry has assigned a team to re-negotiate the 10,000 MW loan deal with China, on the interest terms and rate of disbursements, while clarifying the Merpati issue.
“We want to clarify whether the Merpati-Xi’an contract dispute is really the reason behind the funding problems for our 10,000 MW program. We hope this is not true,” Purnomo added.
The State Ministry of State Enterprises has also set up a team, led by Sahala Lumban Gaol — one of the deputies to the minister — to re-negotiate the Merpati-Xi’an aircraft contract, but little progress has been made on this so far.
Bambang Bhakti, Merpati’s president director, said earlier that given its financial constraints, Merpati could only afford eight aircraft.
“I don’t want to see Merpati go bankrupt because of fulfilling a contract that we cannot afford,” said Said Didu, the secretary to the SOE minister, as well as a commissioner at Merpati.
Said denied that Merpati had broken their contract saying that “the contract states that the deal
is effective upon the approval of the shareholders, while the shareholders have not approved the contract yet”.
Merpati has total debts of Rp 3 trillion owed to two other state firms and for employee redundancy payments. It has also laid off about 1,300 workers on a voluntary basis, costing the airline some Rp 223 billion.
Merpati is now under a financial restructuring program run by the Asset Management Company (PPA).
Sofyan Djalil, the SOE minister, dismissed speculation that these two issues were linked.
“PLN has to continue to re-negotiate with its Chinese investors for its own interest, so does Merpati,” he said recently. (fmb)
