Ozmine 2016 "The guarantee is like a band aid on a person who has fallen on the floor, from a plane at 35,000 ft"

The Ozmine seminar in Jakarta on coal power stations (19 Oct 2016) covered a number of topics. The investor’s outlook on the PLN lenders guarantee looks positive, until you go through the process.

1.     There is so much paperwork required, and endless meetings with several government agencies that it feels like the last drop of blood is drained from the investor.

2.     The guarantee does not cover much, certainly not PLN’s guarantee to pay its monthly invoices, and it seems to only provide a guarantee if the project is terminated after the project has started.

3.     There is a faint positive use for the guarantee, wherein some financiers from Japan or Korea may recognize these guarantees as evidence the project is recognized by the Indonesian government, where it forms two lines in the financier’s agreement.

4.     The guarantee is not a game changer.