PLN, Pertamina debts highest among SOEs

5 December 2018

Electricity firm PLN and energy holding company Pertamina carry the biggest amount of debt among state-owned enterprises (SOE) this year, a ministry official has said, as they are tasked with implementing major government programs.

The interest-bearing debt of the two giants accounted for almost half of the combined debt of 10 SOEs at the end of September, said Aloysius Kiik Ro, the SOEs Ministry’s undersecretary for business restructuring and development, on Tuesday.

He said the 10 SOEs had accumulated debt of Rp 1.73 quadrillion (US$121 billion). That amount excluded third-party funds and reserve liabilities at state-owned banks and financial firms, as well as their accounts payable for operational needs.

PLN’s debt of Rp 543 trillion accounted for 31.37 percent of the combined debt of 10 SOEs. Pertamina, meanwhile, saw its debt reach Rp 522 trillion, or 30.16 percent of the total, data from the ministry show.

However, PLN spokesperson I Made Suprateka argued that the company’s debt as of the third quarter was still considered little compared to the amount of investment it had to make.

“We have to invest about Rp 15 trillion to Rp 20 trillion for one power plant, while the government has ordered us to generate 10 gigawatts of power for the 35 GW program,” he told The Jakarta Post on Tuesday.

PLN data show that its investment grew along with its debt. The company saw its capital expenditure grow by Rp 139 trillion to Rp 269.1 trillion as of the third quarter of 2018 from 2015.

Aside from building power plants, PLN used the borrowed money for the construction of vital infrastructure, such as substations and transmission lines to distribute electricity to customers.

Pertamina was not available for comment regarding the matter.

Toto Pranoto, an SOE expert from the University of Indonesia, told the Post that Pertamina had a lot of debt due to its obligation to fulfill the country’s oil and gas needs, while it also faced pressure from the rupiah depreciation.

Importing oil and gas as well as complying with the government’s policy for uniform fuel prices, which could hurt Pertamina’s cash flow, were just two of its many public-service obligations, he said.

“Furthermore, most of [Pertamina’s] debt and transactions are in US dollars, just like those of PLN, so this puts a lot of pressure on the company’s liabilities,” he said.

Aloysius of the SOE Ministry said on Tuesday that the liabilities of 143 SOEs totaled Rp 5.27 quadrillion as of the third quarter, up 9.13 percent on the year.

Ten SOEs had the most liabilities as of the third quarter, half of which came from the financial sector, while the other half came from the real economy, such as oil and gas, energy, construction, telecommunication and petrochemicals. If all types of financial obligations are included, the total debt of the 10 companies amounted to Rp 4.48 quadrillion, or 84.96 percent of all SOEs’ combined liabilities.

Three of the country’s biggest banks — Bank Rakyat Indonesia (BRI), Bank Mandiri and Bank Negara Indonesia (BNI) — were the SOEs with the biggest amount of liabilities. State-owned lender Bank Tabungan Negara (BTN) and state-owned pension fund and insurer Taspen took the sixth and seventh spot, respectively.

Aloysius said these financial firms’ big debts were caused by their huge reserves and thirdparty funds that needed to be returned to their customers.

As of September, third-party funds of BRI, Mandiri, BNI and BTN stood at Rp 873 trillion, Rp 831 trillion, Rp 549 trillion and Rp 195 trillion, respectively.

Meanwhile, Taspen’s total liabilities as of the third quarter amounted to Rp 222 trillion, Rp 220 trillion of which was in the form of reserves to pay off insurance claims, he said.

Source: Jakarta Post, 5 December 2018