The Finance Ministry of Indonesia has issued a
regulation outlining the procedures for granting government
loan guarantees for the development of electricity
infrastructure in Indonesia. The regulation also outlines the
steps for enforcing the guarantees.
The relevant guarantee will cover all of state electricity
company PLN's financial obligations pursuant to loan agreements
entered into with creditors on the qualified electricity
infrastructure projects. Projects listed by PLN under the
so-called PIK scheme (priority projects pursuant to a
presidential regulation issued earlier this year) qualify to
receive a loan guarantee under the new regulation.
PLN will initiate the guarantee application process by
sending an application package to the relevant directorate
general of the ministry. The directorate general will have 25
days to evaluate and issue its approval. However, there are
several bureaucratic paths that need to be followed.
The guarantee will take the form of a letter signed by the
finance minister and addressed to the creditor. The guarantee
will be valid for the duration of PLN's obligation to the
creditors under the relevant agreement.
If it becomes necessary for PLN's creditors to enforce the
guarantee, PLN would again need to initiate the process
(pursuant to the creditors' claim of default), by sending what
is known as a notice or acknowledgement of its inability to
fulfill its financial obligations to the creditors. The
creditor will need to follow up by submitting a formal written
claim to the Finance Ministry pursuant to the relevant
Disbursement by the government can be made if:
- the relevant agencies have completed their verification
- PLN has submitted a no-objection statement on the
particulars of the claim.
Oene Marseille and Emir Nurmansyah