PT PLN (PERSERO): Electricity Infrastructure Development and Investment Opportunity in Indonesia. London March 15, 2018

Transcription

1 PT PLN (PERSERO): Electricity Infrastructure Development and Investment Opportunity in Indonesia London March 15, 2018

2 Outline 1 COMPANY OVERVIEW & BUSINESS SNAPSHOT 2 INDONESIA ECONOMIC CONDITION AND CREDIT HIGHLIGHT 3 RUPTL AND 35 GW PROGRAM 4 PROJECT OPPORTUNITY IN INVESTMENT OPPORTUNITY IN

3 A COMPANY OVERVIEW & BUSINESS SNAPSHOT

4 Company Overview PLN is Indonesia s state-owned electric utility company, wholly-owned by the Republic of Indonesia through the Ministry of State-Owned Enterprises Major provider of all public electricity and electricity infrastructure in Indonesia and operates across the entire value chain, from power generation and construction of power plants, to transmission, distribution and retail sales of electricity Charges for electricity are based on electricity tariff rates that are set by the Government Law No. 19/2003 on State-Owned Enterprises ( SOEs ): the Government is obligated to provide subsidy to PLN for the difference between the price PLN is permitted to charge for electricity and the cost to produce electricity Fortune Global 500 company (2014 and 2015) Rated as investment-grade by major credit rating agencies Moody s: Baa3 (Positive) / S&P: BB (Stable) / Fitch: BBB (Stable) Key Business Segments Generation (1) Transmission (1) Distribution (1) Controls 76% of total installed generating capacity amounting to approximately 42,344 MW including rentals and projects. Owns and operates 1,201 electricity generating plants, comprising 5,929 electricity generating units Main purchaser of electricity from Independent Power Producers ( s ) Sole provider of power transmission in Indonesia Approximately 47,407 kmc of transmission lines 111,112 MVA of transmission transformer capacity. Sole distributor of electricity to end customers in Indonesia Approximately 947,918 kmc of distribution lines and 58,768 MVA of distribution transformer capacity. Serves approximately 66.9 million customers Source: PLN. Note: According to New Electricity Law No. 30/2009, PLN is also the provider of electricity of last resort, in that if PLN is not supplying a particular area and there are no regional-owned companies, private enterprises or cooperatives that elect to supply electricity in that area, the Government is obligated to instruct SOEs (which includes PLN) to supply electricity to the area. (1) As of 30 September Company Overview 4

5 Extensive Generation Network PLN owns 76% of Indonesia total installed power-generation capacity of 55,388 MW (1). Sumatera Hydro Geothermal Steam-turbine Combined Cycle Gas-turbine Diesel Others 867 MW 110 MW 2,576 MW 1,796 MW 694 MW 2,117 MW 1 MW 3,124 MW 11,285 MW Kalimantan Hydro Steam-turbine Combined Cycle Gas-turbine Diesel Others 32 MW 634 MW 125 MW 301 MW 1,265 MW 2 MW 744 MW 3,103 MW Sulawesi Hydro Geothermal Steam-turbine Gas-turbine Diesel Others 227 MW 80 MW 184 MW 206 MW 934 MW 3 MW 1,315 MW 2,949 MW Maluku Diesel Steam-turbine Others 381 MW 14 MW 2 MW 60 MW 457 MW Capacity Hydro Geothermal Steam-turbine Combined Cycle Gas-turbine Diesel Others PLN Grand 3,585 MW 551 MW 19,346 MW 9,817 MW 3,126 MW 5,905 MW 14 MW 42,344 MW 13,044 MW 55,388 MW Kalimantan Maluku Sumatera Sulawesi Papua Java-Bali Java-Bali Hydro Geothermal Steam-turbine Combined Cycle Gas turbine Diesel Others Source: PLN. Note: (1) As of 30 September 2017 (unaudited). 2,422 MW 345 MW 15,830 MW 7,896 MW 1,925 MW 320 MW 3 MW 7,680 MW 36,421 MW NTB Steam-turbine Diesel Hydro Others NTB 60 MW 354 MW 2 MW 1 MW 63 MW 480 MW NTT Steam-turbine Diesel Geothermal Hydro Others NTT 24 MW 231 MW 16 MW 5 MW 1 MW 6 MW 283 MW Papua Diesel Hydro Steam-turbine Others 303 MW 30 MW 24 MW 1 MW 53 MW 411 MW 5

6 PLN Corporate Structure Ministry of State Owned Enterprises (MSOE) Ministry of Energy and Mineral Resources (MEMR) Ministry of Finance (MoF) Ministry of the Environment Ministry of National Development Planning (BAPPENAS) PT PLN (Persero) PT Indonesia Power Electricity Generation PT Pembangkitan Jawa Bali Electricity Generation PT PLN Batam Regional Fully Integrated Electric Utility PT PLN Tarakan Regional Fully Integrated Electric Utility PT PLN Gas & Geothermal Gas & Geothermal Energy Generation PT Indonesia Comnets Plus Telecommunications for the Electricity Sector PT Prima Layanan Nasional Enjiniring Engineering and Construction Services PT PLN Batubara Coal Supplier for PLN PT Pelayaran Bahtera Adhiguna Shipping Activities Majapahit Holding B.V. Financial Institution PT Haleyora Power O&M Support 6

7 Business Snapshot as of 30 September

8 Financial Profile Assets (IDR tn) Adoption of fair value accounting 1, , , , ,5 Cash and Cash Equivalent (IDR tn) 27,1 23,6 41,9 37,5 607, ,4 16, Q2016 3Q2017 Adoption of fair value Accounting Assets Q2016 3Q2017 Cash and Cash Equivalent Borrowings (IDR tn) Equity (IDR tn) Adoption of fair value accounting ,3 130,6 274,5 263,7 295, ,4 878,4 853,7 880,2 252,1 804,8 153, Q2016 3Q2017 ISFAS 8 Adjustment Borrowings Q2016 3Q2017 ISFAS 8 Adjustment Equity 8

9 Efficient Operations with Continuing Improvement ENERGY MIX (%) 23,5% 6,9% 21,2% 5,2% 15,1% 12,5% 11,7% 8,5% 7,0% 6,0% 5,3% 5,9% 7,8% 7,3% 7,2% 6,4% 7,8% 6,6% 25,3% 23,3% 23,4% 26,3% 23,4% 24,0% 24,6% 5,2% 5,6% 4,5% 4,8% 4,4% 4,5% 4,5% 43,1% 50,4% 51,4% 52,6% 55,8% 54,5% 58,1% 58,6% Jan-18 Coal Geothermal Other Renewable Gas Hydro Fuel Oil Import 9

10 B INDONESIA ECONOMIC CONDITION AND CREDIT HIGHLIGHT

11 Indonesia Economic Conditions and Credit Highlight Indonesia South Korea Singapore Japan Hong Kong 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Malaysia China Thailand Vietnam India Philippines Pakistan Sovereign Credit Rating: Baa3 / Positive (Moody s), BBB / Stable (Fitch) and BBB- / Positive (S&P) Strong Fiscal Position Budget Deficit / GDP (%) Foreign Exchanges Reserves (US$bn) Debt / GDP (%) Supported by strengthening balance sheet, improved policy effectiveness and predictability and increasing country s competitiveness 2.6% 2.2% 2.1% 1.9% 2.6% 2.4% % 33.9% 30.5% 29.8% 26.5% 24.0% Indonesia economic activity expected to pick up pace over the coming quarters driven by strong investment and public infrastructure drive Bank Indonesia s accommodative monetary policy stance expected also help to bolster investor and consumer confidence Strong government focus to boost fiscal position E.g. New tax amnesty bill voted in June 2016 to encourage wealthy individuals to declare and repatriate their assets back to Indonesia Provide a multi-billion-dollar boost to government s tax revenues Attract overseas capital for investments in the Indonesian economy % 4.9% 2.6% 2.7% 5.0% 4.2% 4.2% 4.3% 2.2% 5.2% 4.4% 2.6% 4.3% 3.9% 2.4% % 5.1% 5.2% 3.7% 2.0% 4.4% 4.5% 2.6% 2.6% Indonesia World ASEAN Electricity demand is expected to grow strongly over the next 10 years, supported by strong population growth, growing wealth, and increased economic activity in Indonesia. One of the Fastest Growing Economy (Real GDP Growth) Low Current Electricity Consumption Rate (Per Capita Electricity Consumption (3), MWh per capita) Source: PLN, EIU, BMI, Moody s, S&P and Fitch. 16 Credit Highlights 11

12 Strong Government Support to PLN Given PLN s strategic importance to Indonesia, the government is strongly committed to the sustainability and development of PLN. Commitment to PLN Growing domestic electrification and development of power infrastructure is an economic priority of the government Being the dominant owner and operator of electricity generation capacity and transmission and distribution network in Indonesia, PLN plays a critical role in meeting key social objectives of the government PLN performs public service obligation through the provision of electricity at subsidized rates Wholly owned by the government of Indonesia, with strong international stakeholders participation (including debt investors, partners and suppliers) further elicit strong support from the government to ensure continued development of PLN PLN plays a critical role in meeting key social objectives of the government with subsidized tariff and very strong link with the government of Indonesia. The government provides various support measures, including guarantees on bank loans related to PLN's first fast-track program and subsidies for the company's public service obligation. S&P, August 2017 PLN s strategically important position as Indonesia's only vertically integrated electric utility, and its close linkage with the government. Rating is closely linked to the Indonesian government's credit quality, which owns the company and is expected to provide very high support. Government Support to PLN Government Financial Assistance Close Involvement of Indonesian Government Timely & Adequate Subsidies Extended government loan maturities, converted overdue & penalties into equity in 1998 Channels loans in which Government of Indonesia ( GoI ) is the primary obligor to lenders (2-step loan) Law No. 19/2003: Obligation to provide subsidy to PLN Irrevocable and unconditional guarantee on loans for Fast Track Program ( FTP ) I In accordance with Presidential Regulation No. 48/2011, the GoI is required to provide business viability guarantee letters ( BVGLs ) on FTP II projects Government equity injection GoI is involved in almost every critical stage of PLN s operations: Budget setting, capital expenditure plans, developments and primary energy supply Direct and close involvement of various ministries, such as the Ministry of State Owned Enterprises, Ministry of Energy and Mineral Resources, Ministry of Finance and Ministry of the Environment, and Ministry of National Development Planning (BAPPENAS) Government agencies (i.e. the Board of Finance & Development Control BPKP, Corruption Eradication Commission (KPK) and Attorney General Office) assist in implementing Good Corporate Governance MoF Regulation No. 44/PMK.02/2017 Continuous review ensuring adequate and timely subsidy payments 95% of this month s subsidy will be paid next month, and remaining 5% will be paid on a quarterly basis afterwards Margin is set by Ministry of SOE and Ministry of Energy and Mineral Resource Source: PLN, S&P, Moody s and Fitch. Moody s, May 2017 The Ratings of Pertamina and PLN are equalised with Indonesia s IDRs, given their strong linkage with the state and the sovereign s strong incentives to extend support to these entities. Fitch, December 2017 Credit Highlights Regulation Support Presidential Regulation No 4/2016, amended by President Regulation No 14/2017 on Accelerate Indonesian Power Generation Program MEMR Regulation 10/2017, amended by MEMR Regulation 49/2017 on Principles of Power Purchase Agreement MEMR Reg 45/2017 on the Utilization of Natural Gas for Power Generation MEMR Reg 50/2017 on the Utilization of Renewable Energy Resources for Electricity Supply MEMR Reg 19/2017 on Utilization of Coal for Electricity Supply and Excess Power Purchase 12

13 C RUPTL and 35 GW PROGRAM

14 Estimated Electricity Demand TWh TWh 11,2% SUMATERA 174 TWh 326 TWh 10,1% KALIMANTAN 11,7% SULAWESI 12,1% MALUKU TWh TWh 10,8% INDONESIA TIMUR 10,5% PAPUA 234 TWh 480 TWh 7,2% JAWA - BALI 9,9% NUSA TENGGARA ,3% INDONESIA Tahun Pertumbuhan Ekonomi (%) 5,10 5,50 6,10 6,50 6,48 6,46 6,44 6,42 6,40 6,35 Rasio Elektrifikasi (%) 93,41 95,89 97,32 98,80 99,53 99,81 99,98 100,0 100,0 100,0 14

15 Projected Additional Generation Capacity 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 The Fast Track Programs and 35,000 MW Power Generation Program provide a strong growth trajectory for PLN. Additional Generation Capacity In Indonesia (MW) 18,666 11,305 14,893 7,914 7,861 5,957 6,583 7, ,773 5,548 7,228 1,506 4, ,170 4,060 2,688 5,000 4,373 2,673 1,366 4,451 2,595 2,290 1,025 3,773 1,322 1,502 2,943 1,715 1,904 1,527 1,787 2, GW of capacity planned to be added to 2026 Infrastructure Development Program PLN Unallocated Programs Fast Track Program I Fast Track Program II 35,000 MW Program Overview To build coal-fired power plants to reduce reliance on fuel oil and meet rising domestic electricity demand Focuses on the use of renewables sources of energy such as geothermal and hydro and leverage private sector in electricity development Provide additional 35 GW (mainly coal-fired power plants) to cope with electricity shortage in Indonesia Timeline By 2018 By GW by 2019 and 35GW by 2021 Capacity 9.9 GW 17.4 GW (PLN 5.8 GW) 37GW (PLN 11GW) Energy Mix (3) Coal 100% Hydro 10% Geothermal 29% Gas 1% Coal 60% Financing Fully Financed To be financed by two-step loans, the state budget, bank loans, capital markets and internal sources To be financed by government capital injection/ state budget, bank loans, capital markets and internal sources Benefits Improve energy mix, and therefore operating costs Relieve pressure on subsidy Capitalize on Indonesia s coal resources Involve external strategic investors through s Diversify fuel sources Continue to capitalize on Indonesia s growth in demand Involve foreign investors for capital investment through s Diversify fuel sources Continue to capitalize on Indonesia s growth in demand Source: PLN. Note: (1) Includes capacity from FTP 1 and FTP 2 already completed. (2) Capacity increase for remaining of program post (3) Fuel mix figures for 35,000 MW Program are only targets as at December 31, 2016 for 2021, which are subject to changes and uncertainties. 15

16 The 35 GW Expansion Plan The expansion plan provides an additional 35 GW of power capacity to cope with electricity shortages. Overview New Presidential Regulation No. 4 of 2016 to Accelerate Indonesian 35GW Power Generation Program designed to provide an additional 35 GW of power capacity by 2019 to cope with electricity shortages, and to reduced the country's dependence on fossil fuels Out of the 35 GW planned, coal-fired power plants will represent 20.6 GW (58%), natural gas-fired project 11.5 GW (33%) and renewable energy sources 2.9 GW (9%), split in 2.2 GW of hydropower, 0.5 GW of geothermal energy and 130 MW of other renewable energy sources of electricity capacity The program is supported by tailor-made regulations and includes the development of around 210 power plant projects across the country: 10 GW of project will be directly managed by PLN (35 projects), while private companies are invited to participate in 25 GW of projects (74 projects) investment envisaged is Rp1.200T of which PLN will invest Rp200 T in generation and Rp385 T in transmission and distribution. s are to invest about Rp615 T. Location of Proposed 35GW Projects Sumatera PLN Transmission Substation 9,632 MW 997 MW 8,635 MW 18,429 KM 35,521 MVA Kalimantan PLN Transmission Substation 2,158 MW 713 MW 1,445 MW 5,604 KM 3,500 MVA Sulawesi PLN Transmission Substation 2,906 MW 2,060 MW 846 MW 5,276 KM 4,390 MVA Maluku PLN 189 MW 189 MW - Transmission Substation 653 KM 620 MVA Papua PLN Transmission Substation 308 MW 206 MW 102 MW 364 KM 460 MVA Java - Bali PLN Transmission Substation 20,779 MW 4,865 MW 15,914 MW 9,186 KM 66,263 MVA Sumatera Java-Bali Kalimantan Sulawesi Nusa Tenggara Maluku Papua East Incl. Nusa Tenggara PLN Transmission Substation 712 MW 607 MW 105 MW 2,347 KM 1,410 MVA Source: PLN. 16

17 Progress Electricity Development and 35 GW Program A. ADDITIONAL POWER PLANT, TRANSMISSION, AND SUBSTATION IN JANUARI POWER PLANT TRANSMISSION (Kms) SUBSTATION (MVA) B. PROGRESS OF GW PROGRAM, TRANSMISSION, AND SUBSTATION IN ALL INDONESIAN REGIONS ( AS OF 31 JANUARY 2018) POWER PLANT (MW) TRANSMISSION (Kms) SUBSTATION (MVA) : PLANNING : PROCUREMENT : CONTRACT SIGNING /PPA PRE CONSTRUCTION : CONSTRUCTIONI : SLO/COD/COMISSIONING % % % 35,8 GW % % % % kms % : PRE-CONSTRUCTION : CONSTRUCTION : ENERGIZE/RLB/COMISSIONING % MVA % % - 15 Feb

18 Funding for MW Program T 22% T investment is approximately Rp 1,200 Trillions, with the allocation as follows: a) PLN portion is Rp 585 T consist of Rp 200 trillions for Power Generation Rp 385 Trillions for Transmission and Distribution. b) portion is Rp 615 Trillions T 7% 151.5T 13% 28.6 T 2% 54.4 T 5% PLN's Internal Fund 615 T 51% Penyertaan Modal Negara ("PMN") PLN's Loan Commited PLN Investment portion is Rp 585 Trillions, with the funding plan is as follows: a) 151,5 T is commited for the year , where the disbursement is Rp103,5 Trillions; b) 87,6 T is gap funding for the year 2018*; c) 28,56 T had been allocated under Government Equity Injection in ; d) Internal Fund : 39,3 T was internal fund in T is internal fund plan for ; and e) 262,9 T** is loan signing plan for the year which allocated 18% for generation, 73,5% for transmission and 8,5% for distribution; Developing electricity infrastructure while at the same time maintaining efficiency / decrease in Cost of Electricity Productions as well as borrowing costs becomes a challenge for PLN, in order to boost the economy and provide affordable price electricity to the community. PLN's Loan Signing Plan 2018 PLN's Loan Signing Plan * Note : * Subject to market conditions **Assuming the Loan Signing for the year equal to 2018 amounting 87,6T ***Exchange rate as of 29 December

19 Funding Commitment from Development Bank for the Next 5 Years No Agency Type of Project Committed Fund Scheme Interest Provided 1 World Bank Transmission USD 5 Billion in 5 Years Direct Lending With Government Type of Project Power Distribution Development Guarantee (Programs for Results) Program in Sumatera Renewable Power Plant Commercial Loan through IFC, MIGA guarantee Scattered Transmission and Substation in lndonesia (Phase ll) Distribution 2 ADB Transmission USD 5 Billion in 5 Years Direct Lending With Government Guarantee (Results-based Loan) Electricity Grid Strengthening - Sumatera Program Renewable Power Plant Sector Loan (Gas Fired Power Plant in Eastern Indonesia) Distribution 3 JICA Transmission USD 5 Billion in 5 Years SLA Indramayu Coal Fired PP 1000 MW Tulehu Geothermal PP 20 MW All type of Power Plant Consideration of Direct Lending with Gov. Guarantee (Still wait and see position) 4 KFW Transmission USD 500 Million Direct Lending without Government Guarantee Renewable Power Plant USD 4.5 Billion Direct Lending With Government Guarantee 5 AFD Transmission USD 300 Million Direct Lending Without Government Guarantee Possibility for Direct Lending With Government Guarantee Kumbih Hydro PP (2x10 or 3x15MW Bakaru Hydro PP (2x63MW) REEP Phase-2 (Mini Hydro) Durikosambi Muarakarang 500 kv T/L 6 AIIB Gas Power Plant USD 500 Million Direct Lending with Government Guarantee Transmission Development in Eastern Indonesia Transmission 7 IDB Transmission USD 660 million Direct Lending with Government Power Transformer in Indonesia Guarantee Distribution Results Based Loan for Distribution Notes : commitment about USD20 bio (equivalen Rp250 T) 19

20 D PROJECT OPPORTUNITY IN 2018

21 1. Export-Credit-Agency (ECA) LOAN 2018 (1/2) POWER PLANT No Project Name Province 1 A. EXISTING Sumbagut-2 GEPP (Peaker) 2 Tambak Lorok CCPP Capacity (MW) Aceh 250 Jawa Tengah Lombok FTP-2 CFSPP NTB 100 EPC Contract Loan Signing ECA/ Lender 1596.PJ/DAN.02.01/DIR/20 15, 21 December PJ/061/IP/2017 dated July 14, PJ/DAN.02.01/DIR.20 17, dated December 28, 2017 Loan Amount Original Currency (Mio) Eqv USD (Mio)* 9 February 2018 SACE/CESCE/BNP Paribas /ING Bank EUR 107,55 USD 131,49 19 February 2018 SERV /HSBC/ANZ USD201,75 USD201,75 21 February 2018 BGK/KUKE EUR 80,82 USD 98,81 TOTAL 1,150 USD 432,04 *)Bank of Indonesia - Middle Rate as of 28 Feb 2018 B. SIGNED EPC CONTRACT No Project Name Propinsi Capacity Lender Loan Amount Remark Project Cost (Mio) 1. EUR IDR 746, EUR USD IDR 1,590,700 1 Riau (Peaker) CCPP Riau 200 MW Finnvera/ Mizuho ±EUR 97,600,000 Signing EPC Contract 2 MPP PT PJB 3 MPP PT Indonesia Power Sulteng, Jambi, Aceh, Bengkulu, Kepri, Riau ±400 MW EKN / SEK ±EUR 500,000,000 Signing EPC Contract ±430 MW

22 ECA LOAN 2018 (1/2) POWER PLANT C. PROCUREMENT No Project Name Province 1 Lampung Peaker GECC/GTCC Capacity (MW) Targeted COD Est Project (USD Mio) Financing Target Signing Contract Status Lampung ECA 2018 Bid Doc Preparation 2 Kalsel Peaker 1 GECC/GTCC Kalselteng ECA 2018 Bid Doc Preparation 3 Makassar Peaker GECC/GTCC Sulsel ECA 2018 Bid Doc Preparation 22

23 2. Build-Maintain-Transfer (BMT) Scheme Transmission Line and Substation Sumatera 500 kv Project - BMT Scheme T/L & GITET 500kV KMS COD Galang/Medan/Sumut 3 - Rantau Prapat/Sumut Rantau Prapat/Sumut 1 - Perawang/Riau

24 3. POTENTIAL SUPPORT : Procurement Plan 2018 No Project Name Province Capacity (MW) Project Cost (juta USD) 1 Sumbagut 1,3,4 CCPP Sumut Jawa 3 CCPP Jawa Tengah

25 F INVESTMENT OPPORTUNITY IN 2018

26 POTENTIAL FUNDING PARTICIPATION FOR INVESTOR Local Bond and SUKUK Global Medium Term Notes EPC tender including ECA Financing Contract Global IDR Limited Participation Fund/ Private Equity Fund (RDPT), for Project under PLN Subsidiaries Control. 26

27 Capital Market in Bonds Global IDR Bond PT PLN (Persero) PT Perusahaan Listrik Negara (PLN) (Persero) Nominal Issuance USD Mio Tenor 5, 7, 10, 15 Years Issuer : PT Perusahaan Listrik Negara (Persero) ( PLN ) Profile : Bloomberg Ticker : PLN IJ, Market Cap : USD 6500 Mio (as of March 15, 2018) Rating (Unsolicited) : BBB (Stable) (Fitch); Baa3 (Positive) (Moodys); BB (Stable) (S&P); AAA (Stable) (Pefindo) Planned Issuance Size : USD million Planned Issuance Tenor : 5, 7, 10, 15 years Use of Proceed : Investment activities & general corporate purposes Format : Reg S & 144 A Listing : TBD Target Investors : Offshore institutional fund managers, private banks, hedge funds and onshore accounts Settlement : TBD Approach and Timing : TBD Payments : TBD Contact Person Mr. Sarwono Sudarto (Finance Director) T: E: sarwono.sudarto@pln.co.id This planned structure will be further detailed and fine tuned prior to the issuance date. Bonds PLN 27

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