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Indonesia's PLN lists power plant-backed securities

State enterprises encouraged to securitize assets for infrastructure financing

Indonesian state utility firm Perusahaan Listrik Negara lists its first power plants-backed securities on Sept. 20.   © Reuters

JAKARTA -- Utility firm Perusahaan Listrik Negara raised 4 trillion rupiah ($300 million) in fresh funds from Wednesday's listing of its first asset-backed securities -- the second such issuance by an Indonesian state-owned company for infrastructure financing.

PLN said the securities, issued through its subsidiary Indonesia Power, were oversubscribed by 2.7 times. The securities are backed by future revenues from four coal-fired power plants run by Indonesia Power in the industrial town of Cilegon, Banten province. The plants have a combined capacity of 1,600 megawatts and are part of the Suralaya power-plant complex, which covers at least 12% of the electricity needs for Java and Bali islands.

Proceeds from the securities will be used to finance the construction of other power-plant projects as PLN, which is fully owned by the government, is tasked with procuring an additional 35 gigawatts of electricity between 2015 and 2019 to power up the nation. This includes the construction of two new power plants in Suralaya with a combined capacity of 2,000 megawatts.

Indonesia Power is targeting 6 trillion rupiah from another listing of power plant-backed securities planned for the first half of next year.

Wednesday's listing took place less than a month after state-owned toll operator Jasa Marga listed for the first time its assets-backed securities at the Indonesian Stock Exchange on Aug. 31. The securities are backed by one of Jasa Marga's oldest and most popular toll roads, the Jagorawi toll road, which connects the capital Jakarta with the satellite city of Bogor in West Java province.

Jasa Marga obtained 2 trillion rupiah from the listing after the securities were similarly oversubscribed by 2.7 times. The company said proceeds will be used to build more toll roads.

While state lender Bank Tabungan Negara had earlier issued mortgage-backed securities, Jasa Marga's and PLN's are the first asset-backed securities issued by Indonesian SOEs to help with their infrastructure project financing.

Asset securitization is a way for the Indonesian government to access more funding options for its infrastructure projects. President Joko Widodo has committed to developing toll roads, ports, power plants and others projects worth some 5,000 trillion rupiah during his five-year term ending in 2019. But many of the projects are hampered by limitations on the state budget, as well as by rising debt levels of SOEs.

State Enterprise Minister Rini Soemarno said there may be several other asset-backed securities listings next year. Additionally, the government will encourage SOEs to collect funds through real-estate investment trusts.

"[The REIT scheme] will probably start this year, with a Bank Mandiri building," Soemarno told reporters on Wednesday, referring to the country's largest lender by assets.

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