T

he government wants state-owned enterprises (SOEs) to seek extra funding from external sources to support their project expansions, following recent cuts in the planned state capital injection (PMN).

SOE Minister Rini M. Soemarno said over the weekend that a number of SOEs that suffered from reduced or canceled PMNs would not meet funding problems because they could penetrate both the capital market and banking industry.

“I think the reduction is alright and we don’t have issues with that. We are indeed grateful that the overall PMN has been approved,” Rini said.

House of Representative Commission VI — overseeing SOE, trade and industry — approved last Thursday Rp 50.98 trillion (US$3.88 billion) in capital injection for the firms, with almost half of it to be absorbed by state-owned electricity company PLN.

According to the latest draft of the revised 2016 state budget, PLN will receive Rp 23.56 trillion, or 46 percent of the PMN allocation, after Commission VI approved an additional injection of Rp 13.56 trillion for the firm.

The PMN also includes Rp 2.57 trillion in non-cash injection that can be processed, pending the Supreme Audit Agency’s (BPK) approval. As many as three state firms were removed from the recipient list, namely trading company Perusahaan Perdagangan Indonesia (PPI), port operator Pelindo III and investment firm Bahana Pembinaan Usaha Indonesia (BPUI).

PPI and Pelindo III were initially set to receive Rp 1 trillion in PMN each, while BPUI expected to get Rp 500 billion.

The House claimed that the three firms exhibited strong performance and were not in dire need for PMN, arguing that they would still be able to obtain external funding to finance their expansions.

At the same time, lawmakers slashed the amount of funds for construction firm Hutama Karya to Rp 2 trillion from Rp 3 trillion.

Rini said the ministry, along with the mentioned state-firms, would carry out efforts to prevent the reduction in capital injection from disrupting ongoing government programs, particularly Hutama Karya’s toll road projects.

“We will seek alternative funding options, mainly from bond issuance. We will also review whether there are some routes or sections of Hutama Karya’s toll road projects that can be handed over to third parties,” she said.

Hutama Karya is working on the 2,600-kilometer trans-Sumatra toll road, a megaproject designed to connect 24 toll road sections and estimated to cost Rp 331.69 trillion. The project should finish by 2019, according to its schedule.

Meanwhile, PPI president director Dayu Padmara Rengganis was optimistic that the company’s business expansion would not be delayed because of the PMN cancelation. He attributed the positive prospect to good cash flows and revenues, thanks to its trading operations, particularly in the sugar business.

She said the company had better leverage in case it needed funding from banks, but currently did not have a plan to seek loans.

“We need at least Rp 1 trillion in capital this year, but we want to use our own cash flow. The business for a trading company is relatively simpler compared to construction projects,” she said.

Separately, Hutama Karya president director I Gusti Ngurah Putra said the company would do whatever was needed to finish the first four sections of trans-Sumatra, including Medan-Binjai, Palembang-Indralaya, Bakauheni-Terbanggi Besar and Pekanbaru-Dumai, by 2019 at the latest.

The PMN from this year’s state budget was initially intended to secure the financing of the 140-km Bakauheni-Terbanggi Besar section, with estimated investment of Rp 16.7 trillion. “We need a combination of measures because there is hefty amount of capital needed.”

Hutama Karya plans to issue Rp 6.5 trillion worth of bonds in the third quarter to raise financing and look for additional funding from another source.