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tate oil and gas firm Pertamina has secured a US$2.5 billion hedging facility from three state lenders, making it the largest hedging facility obtained by a state-owned enterprise (SOE).

An agreement on the facility was signed on Wednesday by Pertamina finance director Arief Budiman, Bank Mandiri corporate banking director Royke Tumilaar, Bank Negara Indonesia (BNI) finance director Rico Rizal Budidarmo and Bank Rakyat Indonesia (BRI) human resources director Gatot Mardiwasisto.

Of the hedging figure, Mandiri provided $1 billion, while BRI and BNI provided $750 million each. The facility to Pertamina is now the largest hedging facility provided to an SOE to date.

State electricity firm PLN previously obtained $950 million in foreign exchange (FX) line from the same three banks in April, while national flag carrier Garuda Indonesia secured Rp 1.5 trillion ($113.74 million) in the form of a cross currency swap from several lenders, including BNI, in the period of June 2014 to January 2015.

Arief said that the facility would enable Pertamina to comply with current hedging requirements set by the financial regulator and at the same time meet its own FX needs, which are mostly used to import fuel, procure machinery and pay off loans.

A Bank Indonesia (BI) rule on corporate offshore loans stipulates that non-banking firms must hedge at least 20 percent of its short-term foreign denominated loans in 2015. The ratio will be raised to 25 percent in 2016.

 The regulation says that the firms must also have FX assets that are at least 50 percent equal to the value of their FX liabilities in 2015. Next year, the required ratio is set higher at 70 percent.

'€œOur hedging needs change over time, depending on the situation. For example, we had a [FX] mismatch of $600 million in the first quarter. It would mean that we would be required to hedge at least 20 percent of that figure,'€ Arief said.

 '€œHowever, the figure itself may rise to around $3 billion to $4 billion when oil prices are high,'€ he added.

Regarding its FX liabilities, Arief said that Pertamina had about $16 billion in foreign denominated loans by the end of last year, $4 billion of which were short-term loans.

 '€œThe amount of our short-term loans has shrunk since last year. So, considering present situation, I think that $2.5 billion [facility] will be enough for our hedging needs,'€ he said.

According to BRI finance director Haru Koesmahargyo, Pertamina currently makes up for the biggest portion of its hedging portfolio. BRI has so far provided $1.8 billion'€”worth of hedging facilities to state and private companies.

'€œWe are looking to partner with a total of 22 firms, including 12 SOEs. We have prepared some of the partnership contracts, but have yet to sign them,'€ he said.

Meanwhile, Mandiri'€™s Royke said that it expected to book at least $3 billion in hedging volume by the end of the year from its partnerships with 10 SOEs.