Fast Track Program
Based on Presidential of the Republic of Indonesia Decree No. 71 Year 2006 dated July 5, 2006 which was amended by Presidential of the Republic of Indonesia Decree No. 59 dated December 23, 2009, the Government mandates the Company to build coal-fired power plants (PLTU) at 42 locations in Indonesia, which include 10
power plants with aggregate capacity of 6,900 MW in Java – Bali and 32 power plants with aggregate capacity of 2,252 MW outside Java – Bali. These projects are expected to be in operation by 2010 and 2012.
Power Plant Contracts
As of December 31, 2010 the Company signed 34 Engineering Procurement and Construction (EPC) contracts which consist of 10 electricity power plants with aggregate capacity of 7,490 MW in Java – Bali and 24 electricity power plants with aggregate capacity of 2,031 MW outside Java – Bali. Under the terms of such contracts, the Company is required to pay the contractor a down payment, which is approximately 15% of the contract price and the remaining 85% will be funded through credit facilities from banks.
Until December 31, 2010 the Company made a total down payment of US$ 832 million and Rp 4,394,840 million for 33 EPC contracts or approximately 15% of the total contract price, which are Recorded as construction in progress (Note 6). Such down payments are funded by the proceeds of the issued Guaranteed Notes and withdrawal of credit facilities for fast track program.
As of December 31, 2010 the Company signed 301 contracts for upgrading and constructing new transmission and substations in Java and outside Java. These projects are financed by own funds and withdrawal of credit facilities from banks.
Regular Construction Contracts
Capital expenditure commitments for regular construction represent project contracts signed for additional electricity generating plants and development of transmission and distribution network. These projects are financed by own funds and other external funding through offshore loans, grants and investment projects from the State budget.
As of December 31, 2010, IP and PJB entered into commitments or contracts with various parties for the supply of materials, property, plant and equipment, and contracted services in various currencies,
with Rupiah equivalent totaling to Rp 756,321 million and Rp 2,380,220 million, respectively.
Loan agreements for fast track program
The purpose of these loan facilities is to finance 85% of the contract price of EPC for fast track program. The term of the loan includes preparation of credit for 36 months and is fully guaranteed by the Government of the Republic Indonesia in accordance with the Presidential Regulation of the Republic of Indonesia (PP) No. 91 Year 2007, superseding No. 86 Year 2006, regarding Grant of Government Guarantee for Construction of Coal-Fired Power Plant. In connection with these loans, the Company is obliged to comply with general restrictions.
The loan facilities utilized by the Company from January 1, 2011 until the date of the issuance of the consolidated financial statements amounted to Rp 1,083,420 million and US$ 46 million.