Govt to Fully Guarantee Financing of Power Projects

Govt to Fully Guarantee Financing of Power Projects

JAKARTA ~ Finance Minister Sri Mulyani Indrawati said this week the government would fully guarantee financing for new power projects offered by state-run electricity firm PLN to third parties.

PLN is offering several power plant projects to expand its electricity generating capacity by 10,000 megawatts. Some bidders have asked for government guarantees in the event that PLN faces financial problems.

“It has been decided that we will have a guarantee that reflects the risks. Given that PLN is 100-percent owned by the government, the projects will get a full (government) guarantee,” Indrawati told reporters.

As a consequence, an existing presidential decree that only covers guarantees on export credit facilities would need to be changed to reflect a broader coverage of risks that may arise from the project funding, she said.

She said the government would be involved in choosing the funding scheme for PLN.

“It is expected that the funding scheme (as a result of the government’s involvement) will be cheaper and the risk lower,” she said.

Foreign companies that have won bids to build PLN’s new power plants include China’s Dongfang Electric Corp, Shanghai Electric Corporation, China’s CNTIC, and Harbin Power Engineering.

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