PT PLN secures $500m green loan for hydro and geothermal projects

PT PLN secures $500m green loan for hydro and geothermal projects Geothermal plant, Indonesia (source: PLN)
Alexander Richter 5 Jan 2021

PLN has secured green loan financing of $500 million from an international consortium of banks targeted to support PLN in developing of hydro and geothermal projects in Indonesia.

Reported a week ago, PT Perusahaan Listrik Negara (PLN) has received green loan  funding for the development of environmentally friendly energy This proves that international financial institutions recognize that companies are developing green energy.

The commitment to develop the green pillar in PLN’s transformation has received financial support of $500 million from international banks by obtaining guarantees from the Multilateral Investment Guarantee Agency (MIGA), which is a member of the World Bank Group.

The creditors for this facility include Citibank, DBS Bank, JPMorgan, KfW IPEX, LBBW, OCBC, Standard Chartered Bank and SMBC.

The loan is the first green loan transaction obtained by a BUMN in Indonesia and the first to be executed by PLN. The loan will be used for long-term financing of Renewable Energy (EBT) and environmentally friendly electricity infrastructure.

Through its inaugural program entitled Non-Honouring of Financial Obligation by State-Owned Enterprise (NHFO-SOE), MIGA will guarantee 95% of financing for the next 5 (five) years.

This transaction is also MIGA’s first transaction using the NHFO-SOE scheme and is the first transaction during a pandemic period both in Indonesia and in the region.

“In a period of difficult liquidity and loan markets, PLN has succeeded in achieving cost efficiency in finance by implementing a structure designed to attract international creditors,” explained PLN’s Finance Director, Sinthya Roesly, in a written statement, Monday (28/12).

He said that this support was obtained in a fairly short time, which is only about 5 (five) months, even though this transaction is the first PLN transaction for green loans and MIGA Guaranteed with a fairly complex scheme.

According to him, price fixing had been negotiated with creditors since early July, after a thorough tender process at the most competitive price possible even during the pandemic.

“This step is a follow-up to PLN in realizing the Sustainable Financing Framework which was officially launched on November 2, 2020 and is a real agenda for the transformation of PLN ( Lean, Green, Innovative & Customer Focused ),” he explained. Sinthya.

Currently, PLN is and continues to work with various stakeholders, namely bilateral and multilateral institutions to realize various green energy initiatives and increase the ratio of new and renewable energies throughout Indonesia.

Source: KontanPLN press release