Dian Swastatika seeks loans to finance project in Sumatra

The publicly-listed energy and infrastructure business unit of Sinar Mas Group, PT Dian Swastatika Sentosa (DSSA), is seeking loans amounting to US$400 million from local and foreign banks to support a power plant project in South Sumatra.

“We will finance 70 to 80 percent of funds for the power plant project from bank loans. We are starting to assess several domestic and Chinese banks,” DSSA director Hermawan Tarjono said on Monday.

DSSA secured the power plant project, which is called the Sumsel-5 coal-fired power plant, from state-electricity company PT PLN last year. Hermawan said that DSSA focused on machinery procurement for the power plant construction before it turned to how to fund the project.

PLN has issued a November deadline to DSSA to locate funding sources, according to Hermawan.

DSSA submitted a file to the Indonesia Stock Exchange (IDX) on Monday, announcing that its subsidiary PT DSSP Power Sumsel recently signed agreements with Chinese companies on Feb. 11 over machinery procurement to support the Sumsel-5 coal-fired power plant.

The agreements comprised of equipment supply contracts with China National Electric Engineering Co, Ltd as well as design engineering and construction contracts with Harbin Power System Engineering & Research Institute Co Ltd.

The machinery procurement is worth $300 million.

The power plant project is scheduled to be finished in 2015 and will have a capacity of 2x150 megawatts (MW). The power to be produced from the power plant will be sold to PLN.

The Sumsel-5 coal-fired power plant will enrich the business portfolio of DSSA, which currently operates four power plants, according to Hermawan. Two of DSSA’s power plants are located in Tangerang and Serang, with the other two in Karawang. The total power capacity of the plants is 300 MW.

Hermawan said that DSSA allocated $20 million in capital expenditure, which would be spent mostly on the maintenance of the four power plants this year. Meanwhile, DSSP has allocated $50 million in capital expenditure for the Sumsel-5 coal-fired power plant this year.

DSSA is aiming to reap up to $825 million in revenue this year, an increase of 50 percent from last year’s estimated revenue of $550 million.

“The major contributor for our revenue will be the coal mining business at about 50 percent,” Hermawan said.

DSSA operates in power generation, coal mining and telecommunications.