Government Provides PLN Debt Guarantee Of IDR 4.3 Trillion In Financial Institutions Headquartered In China

PLN officers are checking an electrical installation belonging to one of the residents. (Photo: PLN)

JAKARTA - The government through the Director General of Financing and Risk Management of the Ministry of Finance together with PT PLN, PT Penjaminan Infrastruktur Indonesia (PII), and the Asian Infrastructure Investment Bank (AIIB) signed a guarantee agreement for PLN loans from AIIB which reached 310 million dollars or equivalent to IDR 4 , 34 trillion (exchange rate Rp. 14,000).

The plan is that the state stun company will pay off its obligations to AIIB within the next 20 years.

Quoting the Ministry of Finance's official broadcast on Friday, February 19, it was stated that the main points of this guarantee agreement cover three things, with the following details:

1. Guarantee Implementation Agreement between PT Penjaminan Infrastruktur Indonesia (Persero) and PT PLN (Persero).

2. Loan Agreement between PT PLN (Persero) and AIIB, and

3. Guarantee Agreement between the Ministry of Finance, PT PII (Persero) and AIIB.

Meanwhile, the fresh funds received by PLN will be used for the development of distribution networks in East Java and Bali.

"So, it is hoped that it can improve access and quality of electricity supply services by PLN to the public," said the Ministry of Finance in writing.

For information, in this agreement the government includes PII as a Special Mission Vehicle (SMV). The presence of PII is intended to carry out the APBN's ring fencing function against sudden shock from guarantee claims and to mitigate the limitations of the APBN for the allocation of funds for guarantee obligations.

In addition, PII will also bear the underwriting portion of the first loss basis scheme of 62 million US dollars or Rp869.81 billion.

"It is hoped that PII's participation can strengthen project risk management," continued the agency led by Sri Mulyani.

For information, this signing ceremony was held virtually attended by the Director General of Financing and Risk Management, the President Director of PLN, the President Director of PII, the Vice President, AIIB Investment Operations, and the Indonesian Ambassador to China and Mongolia.

AAIB itself is a multilateral financial institution pioneered by China with the aim of providing funding facilities for infrastructure development projects in the Asia Pacific region.