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Jakarta Post

WIKA may use Chinese loans to build power plants

  • Anggi M. Lubis

    The Jakarta Post

Jakarta   /   Thu, September 17, 2015   /  05:27 pm

State-run builder Wijaya Karya (WIKA) has said that it would use loans in the pipeline from China Development Bank (CDB) to fund US$6 billion power plant projects in Java.

WIKA corporate secretary Suradi told The Jakarta Post over the phone that his company would likely request a credit facility to finance the development of the Java 5 and Java 7 coal-fired power plants, each of which will have the capacity to produce 2 x 1,000 megawatt (MW) of electricity, in Banten.

'€œWe previously planned to use the loan for the high-speed railway project. Now that the project has been scrapped we are waiting on the tender for power plant projects, probably in October,'€ Suradi said.

WIKA was a lead consortium for Indonesia'€™s first high-speed train project, which was expected to connect Java'€™s major cities Jakarta and Bandung, before it was scrapped earlier this month and replaced with a medium-speed train project.

WIKA'€™s power plant projects are part of the government'€™s 35,000 MW additional power supply expected to be achieved in five years, for which a number of firms have stated their intention to bid on, including WIKA.

Suradi said that WIKA would work with China Nuclear Group Engineering Corporation (CNEC) and a local firm, Sumber Segara Primadaya, for the Java plants.

The company'€™s portion in the consortium was still being discussed, Suradi said, however adding that the China-based firm would likely hold majority stake and that WIKA was aiming for around 15 to 30 percent in the joint venture.

For each megawatt in the plant, the winner of the tender might be required to spend around $1.5 million, according to Suradi, meaning that if the consortium wins both projects it has to spend around $6 billion.

For WIKA'€™s portion of investment, Suradi said that 30 percent would come from the company'€™s equity and that the remainder would be from loans.

He explained that for WIKA'€™s equity portion, the builder would resort to the state-capital injection the company had requested for next year. WIKA is seeking an injection of Rp 3 trillion for a number of infrastructure projects the company plans to work on, the amount of which will be raised through a rights issue.

The loans, he said, would probably come from CDB, which would be requested through a state-owned lender as the facilitator.

CDB has been offering credit facilities for state-run lenders Bank Rakyat Indonesia (BRI), Bank Mandiri and Bank Negara Indonesia (BNI), amounting to $3 billion in credit facilities in a bid to enlarge their funding capabilities.

Bank Mandiri president director Budi Gunadi Sadikin has been cited by kontan.com as saying that the loans were close to being signed and would mature in 10 years with LIBOR set at 2.8 percent.

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