“PLN reported [on Monday] to the State Ministry for State Enterprises that we are going to sign a number of loan deals with Chinese banks in May,” PLN president director Fahmi Mochtar said. “The lead arranger is the China Export Import Bank.”
“The funds will be disbursed around three months after the signing of the deals, once all the requirements are met,” Fahmi said, adding that the company would push ahead with the projects during the interval and bill the costs to the lenders later.
In February 2009, Energy Minister Purnomo Yusgiantoro, said a consortium of Chinese banks had delayed most of the loans for fast-track power projects in retaliation for state-owned airline PT Merpati Indonesia’s alleged failure to abide by the terms of a $232 million contract with Chinese Xian Aircraft Industry Co. for the purchase of 15 MA-60 turboprop aircraft, which were to be financed by the China Exim Bank.
In a sign of how serious things had become, Finance Minister Sri Mulyani and Trade Minister Mari Pangestu flew to Beijing in March 2009 in what appeared to be a last-ditch effort to resolve the dispute. However, there has been no official announcement on the progress of the negotiations.
“For power plant projects outside of Java Island, we will work with the Association of Rural Development Banks [Asbanda], which will provide about Rp 4.5 trillion [$405 million] in financing for several small projects,” Fahmi said, adding that the agreement with Asbanda was expected to be signed by the end of the month. Fahmi said that a further loan agreement would be signed later in May, with Bank of China as the lead arranger, to fund a $455 million expansion the 900 MW Teluk Naga plant in Banten area.
