PLN’s $2b notes put on hold amid market uncertainties
Rangga D. Fadillah, The Jakarta Post, Jakarta - 23/09/2011
State-owned electricity company PLN may delay the offering of the company’s US$2 billion notes if uncertainties in the global market continue.
PLN’s finance director Setio Anggoro Dewo said in Jakarta on Thursday that the notes are ready for offer but the company needs to wait until market conditions improve before proceeding.
“Right now, the market isn’t in a good condition. We only inform the market that we have issued the notes; their execution depends on market opportunity,” he told reporters in a telephone interview.
Dewo said that in contrast to the $1.25 billion issued in 2009, the current notes will be issued gradually, depending on the progress of the company’s expansion plans and market demands, with a limit of $2 billion. He added, however, that the offer period will end on Dec. 31, whether or not all the notes have been absorbed by the market.
Barclays Capital and Citi have been appointed the arrangers for the issuance, as well as its dealers, in collaboration with HSBC and UBS, PLN confirmed in a press statement.
PLN is scheduled to hold meetings with potential investors, which will begin on Sept. 27.
Dewo said that the funds acquired from the notes’ issuance will be used for capital expenditure in 2011 and 2012.
As reported earlier, PLN had allocated Rp 66.5 trillion ($7.25 billion) for capital expenditure this year, jumping 65 percent from Rp 40 trillion last year. Of the Rp 66.5 trillion, Rp 35.7 trillion will come from external sources, including bond issuances.
The issuance of bonds and notes is to garner revenue to build power plants, develop transmission lines, improve distribution channels and reduce blackouts.
According to PT PLN’s Electricity Procurement Business Plans (RUPTL), out of 55,484 megawatts (MW), 31,958 MW will be produced by the company’s power plants, while the remaining 23,525 MW will come from independent power producers (IPPs). From now until 2019, power plants with a total capacity of 36,222 MW will be set up in Java and Bali, 12,365 MW in western Indonesia and 6,896 MW in eastern Indonesia.
This year, PLN aims to record total revenues of Rp 190 trillion, up 9.19 percent from the 2010 estimate of Rp 174 trillion.
The utility said it generated 88.2 terawatt-hours (TWh) of electricity in the first half of 2011, up 6.3 percent from the same period last year.
The company is continually working to increase the country’s electrification ratio, which currently stands at 66 percent.
On Monday evening, there was a fire at PLN’s Suralaya 8 coal-fired power plant in Suralaya, Banten. Ngurah Adyana, PLN’s operations director for Java and Bali, said that currently the company is investigating the cause of the blaze.
He said that the incident did not affect the power supply for Java and Bali. “There was no blackout last night [Monday evening]. The Java-Bali system can supply 19,700 megawatts, while the region’s peak burden is only 19,200 megawatts. The Suralaya power plant has a total capacity of 625 megawatts, so we can still cover the supply loss,” he said.
He reported that two workers suffered burns due to the fire. “The power plant’s operation has been temporarily suspended,” said Adyana.