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House to scrutinize Rp 11t loan to PLN
The government has proposed to disburse this year Rp 12
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The government has proposed to disburse this year Rp 12.99 trillion (U$S1.18 billion) via the so-called subsidiary loan agreement (SLA).
Formerly called the investment fund account (RDI), the SLA is an allocatable loan fund derived from the government’s overseas loans to be on-lent to state firms and local government administrations.
Finance Minister Sri Mulyani Indrawati told a hearing with legislators Thursday that the funds should have been included in the 2009 state budget, which the House of Representatives had approved, but could not be included on time as the proposals from state firms and local government came too late.
If taken up, the loans will entirely be the responsibility of the debtors but still need to be officially approved as part of the state budget.
“That’s why this (proposal) needs the House’s approval as it will be included in the state budget in accordance with existing laws,” Mulyani said.
Of the total available, around 95 percent is requested by state enterprises, with regional government administrations taking up the rest.
The biggest loan recipient by far, if approved, will be state utility company PT Perusahaan Listrik Negara (PLN) which reportedly has requested Rp 11.09 trillion. But PLN has not yet confirmed this.
The hearing did not reveal the details as to what PLN would use the loan for, but the huge amount drew sharp words from some members of the House.
“PLN has received a major [power] subsidy from the state budget. Why would the company need this particular loan?” questioned lawmaker Alex Litaay, referring to the Rp 40 trillion allocation made for the electricity subsidy this year.
Another member, Jazuli Juwaini, echoed Alex, questioning the eligibility and transparency of PLN and other state enterprises as borrowers, indicating that approval for a loan of such magnitude would need “scrutiny” from the House.
Mulyani responded by agreeing that when it came to paying back loans, regional administrations have a better track record than state companies. She did not elaborate.
Mulyani added that the SLA is the product of a lengthy negotiation process between foreign creditors, borrowers, and relevant ministries, so the finance ministry is not usually directly involved in technical matters such as the proposed use of the loans.
She said however that part of the foreign loan was given largely by the Japanese government, one of the country’s major donors, which has set a deadline for the availability of the loans.
“If the SLA is not approved soon, it is possible that the loan will not be available anymore in the future.”
On conclusion, the House scheduled further hearings to discuss the SLA, in particular the part for PLN. But it did approve Rp 649.9 billion of loans to be used by regional administrations.
