audited project financial statements - adb
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Audited Project Financial Statements
The audited project financial statements are documents owned by the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff. These documents are made publicly available in accordance with ADB’s Access to Information Policy and as agreed between ADB and the Perusahaan Perseroan (Persero) PT Perusahaan Listrik Negara.
Project Number: 49080-001 Loan Number: 3339/8297 Period covered: 1 January 2018 to 31 December 2018
INO: Electricity Grid Strengthening—Sumatra Program
Prepared by Perusahaan Perseroan (Persero) PT Perusahaan Listrik Negara
For the Asian Development Bank Date received by ADB: 2 July 2019
PERUSAHAAN PERSEROAN (PERSERO)
PT PERUSAHAAN LISTRIK NEGARA
Electricity Grid Strengthening Sumatra Program – Results Based Lending
Special-Purpose Statements of Program Expenditures and Financing
For the Year Ended December 31, 2018
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Special-Purpose Statements of Program Expenditures and Financing Table of Contents Pages Independent Auditors’ Reports Independent Accountant’s Reports Special-Purpose Statements of Program Expenditures and Financing For the year ended December 31, 2018
Statement of Actual Program Expenditures and Financing 1 Statements of Cumulative Actual Program Expenditures 3 Notes to Special-Purpose Statements of Program Expenditures and Financing 5
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PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Statement of Actual Program Expenditures and Financing For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
ADB AIF TOTAL ADB AIF TOTAL ADB AIF
Notes US$ US$ US$ US$ US$ US$ % %
By financing disbursement :
Year 2017
DLI 1 4a 3,842 158 4,000 3,842 158 4,000 100.00% 100.00%
DLI 2 4b 17,250 750 18,000 5,074 223 5,297 29.41% 29.73%
DLI 3 4c 11,500 500 12,000 11,500 500 12,000 100.00% 100.00%
DLI 4 4d 21,086 914 22,000 16,594 727 17,321 78.70% 79.54%
DLI 5 4e 1,921 79 2,000 1,921 79 2,000 100.00% 100.00%
DLI 6 4f 3,837 163 4,000 3,837 163 4,000 100.00% 100.00%
Year 2018
DLI 1 4a 28,750 1,250 30,000 28,750 1,250 30,000 100.00% 100.00%
DLI 2 4b 5,750 250 6,000 -- -- -- 0.00% 0.00%
DLI 3 4c 11,500 500 12,000 -- -- -- 0.00% 0.00%
DLI 4 4d 28,750 1,250 30,000 -- -- -- 0.00% 0.00%
DLI 5 4e 20,125 875 21,000 13,662 599 14,261 67.89% 68.45%
DLI 6 4f 20,125 875 21,000 10,457 458 10,915 51.96% 52.40%
Year 2019
DLI 1 4a 20,169 895 21,064 20,169 895 21,064 100.00% 100.00%
Financing for prior results 4g 43,110 1,890 45,000 43,110 1,890 45,000 100.00% 100.00%
Total 237,715 10,349 248,064 158,916 6,942 165,858 66.85% 67.08%
Description
Plan Financed (Unaudited) Actual FinancedActual/ Plan Financed
(Unaudited)
2
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Statement of Actual Program Expenditures and Financing For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
ADB AIF TOTAL ADB AIF TOTAL ADB AIFUS$ US$ US$ US$ US$ US$ % %
By expenditure :
Unit Induk Wilayah Aceh 22,410 974 23,384 34,107 1,490 35,597 152.20% 152.98%
Unit Induk Wilayah Sumatera Utara 34,610 1,505 36,115 60,992 2,664 63,656 176.23% 177.01%
Unit Induk Wilayah Riau & Kepulauan Riau 51,055 2,220 53,275 16,483 720 17,203 32.28% 32.43%
Unit Induk Wilayah Sumatera Barat 28,724 1,249 29,973 19,908 870 20,778 69.31% 69.66%
Unit Induk Wilayah Sumatera Selatan, Jambi & Bengkulu 38,982 1,695 40,677 61,411 2,683 64,094 157.54% 158.29%
Unit Induk Wilayah Bangka Belitung 15,998 696 16,694 12,026 525 12,551 75.17% 75.43%
Unit Induk Distribusi Lampung 18,533 806 19,339 18,336 801 19,137 98.94% 99.38%
Unit Induk P3B Sumatera 27,403 1,204 28,607 16,904 738 17,642 61.69% 61.30%
Total 237,715 10,349 248,064 240,167 10,491 250,658 101.03% 101.37%
(Unaudited)
Description
Plan Expenditures (Unaudited) Actual ExpendituresActual/ Plan Expenditures
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PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Statement of Cumulative Actual Program Financing As of December 31, 2018 and 2017 (In thousands of US$, unless otherwise stated)
ADB AIF TOTAL ADB AIF TOTAL
Notes US$ US$ US$ US$ US$ US$
By financing disbursement :
DLI 1 4a 106,419 4,645 111,064 53,658 2,342 56,000
DLI 2 4b 22,324 973 23,297 17,250 750 18,000
DLI 3 4c 23,000 1,000 24,000 11,500 500 12,000
DLI 4 4d 110,508 4,813 115,321 93,914 4,086 98,000
DLI 5 4e 99,912 4,349 104,261 84,329 3,671 88,000
DLI 6 4f 39,208 1,708 40,916 24,913 1,087 26,000
Financing for prior results 4g 43,110 1,890 45,000 -- -- --
Total 444,481 19,378 463,859 285,564 12,436 298,000
Description
December 31, 2018 December 31, 2017
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PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Statement of Cumulative Actual Program Expenditures As of December 31, 2018 and 2017 (In thousands of US$, unless otherwise stated)
ADB AIF TOTAL ADB AIF TOTAL
US$ US$ US$ US$ US$ US$
By expenditures :
Unit Induk Wilayah Aceh 53,078 2,315 55,393 18,971 825 19,796
Unit Induk Wilayah Sumatera Utara 90,292 3,938 94,230 29,300 1,274 30,574
Unit Induk Wilayah Riau & Kepulauan Riau 59,704 2,599 62,303 43,221 1,879 45,100
Unit Induk Wilayah Sumatera Barat 44,225 1,927 46,152 24,317 1,057 25,374
Unit Induk Wilayah Sumatera Selatan,
Jambi & Bengkulu 94,411 4,118 98,529 33,000 1,435 34,435
Unit Induk Wilayah Bangka Belitung 25,569 1,114 26,683 13,543 589 14,132
Unit Induk Distribusi Lampung 34,025 1,483 35,508 15,689 682 16,371
Unit Induk P3B Sumatera 41,696 1,816 43,512 24,792 1,078 25,870
Total 443,000 19,310 462,310 202,833 8,819 211,652
December 31, 2018
Description
December 31, 2017
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
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1. General
During 2015–2019, the Government of Indonesia (the “Government”) seeks to significantly accelerate economic growth in order to reduce income inequality and further reduce poverty. The government has prioritized infrastructure development especially in the power subsector as a key measure that will help increase incomes, reduce poverty, and foster improved connectively and inclusive growth in the country. The country’s ability to provide for growth in industrial and commercial power demand is severely constrained in the effect of the expansion in the power subsector over the past decade has not kept up with increased power demand over the last five years. Generation capacity additions are delayed, and underinvestment and infrastructural deficits extend to the transmission and distribution systems. Indices for power system stability and reliability are showing deteriorating trends, and there have been incidences of blackouts, in Sumatra.
The Government recognizes that business as usual will not lead to increased access to reliable and cost-effective supplies of electricity. The country’s power subsector is dominated by the State Electricity Corporation, Perusahaan Perseroan (Persero) PT Perusahaan Listrik Negara (the “Borrower” or “Company” or “PLN”), a vertically integrated utility, which owns and manages almost 75% of the total power generation whilst Independent Power Producers (IPPs) and captive generation make up the balance. PLN under the guidance of the government has outlined a very ambitious expansion program in the power subsector.
The Results Based Lending Program (“RBL”) will focus on supporting the strengthening of the Sumatra power grid. The RBL is defined to cover transmission and distribution for 2015-2019, which in the RUPTL is estimated at US$7,362.4 million. PLN’s estimates cover engineering, procurement, and construction (“EPC”) costs and do not include other expenditure items required to make the program operational (e.g. land acquisition, permits, consultants, project management, and overhead). ADB has therefore estimated the total program costs estimated at US$10,834.5 million (consisting of US$7,362.4 million EPC costs and US$3,472.1 million additional expenditure items). Transmission costs accounts for 79.6% and distribution costs for 20.4%, while the total cost allocations per year vary between 17%–24%. The combination of EPC costs and additional expenditure items makes the full set of expenditures comprehensive and the RBL program fully operational. The RBL modality is appropriate given (i) PLN’s and the government’s strong ownership of the generation expansion program; (ii) the government’s desire to shift to direct lending for ease of efficiency and simplification of project approval process; (iii) the opportunity to improve institutional capacity and country fiduciary systems; and (iv) the presence of World Bank, Japan, KfW, and other development partners in the power subsector.
PLN will finance at least US$5,136.3 million (47.4%) of the broader US$10,834.5 million PLN program for Sumatra and Asian Development Bank (“ADB”) will lend US$600 million (5.5%). PLN and the government may request ADB to provide additional financing during satisfactory implementation of the subsequent phases of Electricity Grid Strengthening – Sumatra Program to bridge any financing gap through to 2019. For the Electricity Grid Strengthening – Sumatra Program, PLN has requested a loan to be guaranteed by the Republic of Indonesia in the amount of US$575 million from ADB’s ordinary capital resources and US$25 million from the ASEAN Infrastructure Fund (“AIF”).
The total financing of US$600 million loan for the Electricity Grid Strengthening – Sumatra Program (the “Program”) aims to achieve the adequacy and reliability of power supply in Sumatra.
The expected outcome of the Program will be the adequacy and reliability of power supply in Sumatra that is to funding electricity grid strengthening Sumatra Program at Wilayah Aceh; Wilayah Sumatera Utara; Wilayah Riau and Kepulauan Riau; Wilayah Sumatera Barat, Wilayah Sumatera Selatan, Jambi and Bengkulu; Wilayah Bangka Belitung; Distribusi Lampung; and P3B Sumatera of which based on the schedule shall be completed by December 31, 2019.
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing (Continued) For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
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The Program shall comprise the following outputs: 1. Output 1: Existing transmission system strengthened and expanded
The Program shall strengthen and expand the existing transmission system by: a. reconductoring of existing 150 kilovolt (“kV”) transmission lines; b. extension of 150 kV and 275 kV substations; c. installation of 150 kV and 275 kV reactors and capacitors; and d. expansion of outgoing 20 kV switchgears at existing 150 kV substation.
2. Output 2: Existing distribution system strengthened and expanded The Program shall expand and reinforce the medium voltage (20 kV) and low voltage distribution networks, the installation of distribution transformers, the installation of service connections and feeders, and the installation of customer meter boxes and circuit breakers.
3. Output 3: Performance management and implementation improved The Program shall accelerate the Borrower’s staff training and certification programs, as well as on strengthening contract implementation processes.
On December 4, 2015, PLN and ADB entered into Loan Agreement No. 3339-INO under which ADB agreed to lend to the Borrower from ADB’s ordinary capital resources an amount of US$575,000 to finance for enhancing the quality of life in Indonesian society by the sustainable use of electricity as a key driver of increased economic activity. On the same date, the Borrower has also received a loan from AIF amounted to US$25,000, which administered by ADB, under the Loan Agreement No. 8297-INO.
The loan is to be guaranteed by the Republic of Indonesia (“Guarantor”) under the terms of the Guarantee Agreement of even date herewith between the Guarantor and ADB. The Loan Agreement effective as of February 1, 2016.
The Company is required to comply with financial covenants, as stated in the Loan Agreements dated December 4, including (1) self-financing ratio shall be at least 15% from the period beginning January 1, 2016, (2) debt service coverage shall be at least 1.35 times from the period beginning January 1, 2016 to December 31, 2017 and shall be at least 1.5 times for the period beginning January 1, 2018, of its estimated maximum debt service requirements of the Company for any succeeding fiscal year on all its debts including the debt incurred, (3) the ratio of debt to equity shall not be greater than 75 to 25, and the covenant that all proceeds of the loan withdrawn from ADB should be utilized developing the Program as agreed in the ADB Loan 3339-INO and 8297-INO.
The maturity date of the ADB Loan 3339-INO and 8297-INO are September 15, 2035. The last date for disbursement of the ADB Loan 3339-INO and 8297-INO are June 30, 2020
Disbursement Linked Indicator (“DLI”) is an indicator set forth in Loan Agreement which the Borrower is required to achieved in order to withdraw the amount of Loan proceeds allocated in the withdrawal table.
ADB fielded a loan and review mission on October 8, 2018 to discuss the progress of implementation of ADB Loan 3339-INO and 8297-INO. The result of this mission amended the DLI matrix. The mission also amended the loan allocation which effective on November 26, 2018.
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing (Continued) For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
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The annual DLI indicator which known as DLI matrix based on Loan Agreement is as follows:
Indicator Prior Result (2015) 2016 2017 2018 2019
DLI 1: Number of PLN
customers in Sumatra
increase by at least 3%
each year
-- At least 11.86
million by end
of 2016
At least 12.21
million by end
of 2017
At least 12.58
million by end
of 2018
At least 12.96
million by end
of 2019
DLI 2: Residential
energy sales grow by at
least 3% each year from
the preceding year
-- At least
16,848 GWh
At least
17,421 GWh
At least
18,048 GWh
At least
18,734 GWh
DLI 3: Number of
medium voltage ("MV")
feeder permanent
interruptions per 100 km
maintained at 2014
baseline level or
improved
-- Reduced to
less than
21.12 by end
of 2016
Reduced to
less than
21.08 by end
of 2017
Reduced to
less than
21.04 by end
of 2018
Reduced to
less than
21.02 by end
of 2019
Outcome: Adequacy and reliability of power supply achieved for Sumatra
DLI 4: Cumulative length
of 150 kV transmission
lines reconductored
25% of the contracts for
strengthening and
expansion of the
transmission system are
made effective in 2015
1,242 ckm by
end of 2016
1,367 ckm by
end of 2017
1,543 ckm by
end of 2018
1,743 ckm by
end of 2019
DLI 5: Additional number
of distribution
transformer units
installed annually
(i) the Borrower's
procurement performance
indicators agreed with ADB;
(ii) procurement baseline
data for the first half of 2015
collected and made
available to ADB; and (iii)
procurement performance
measurement targets for
2016-2019 agreed with ADB.
2,582
distribution
2,642
distribution
3,501
distribution
3,652
distribution
DLI 6: Additional length
of MV distribution lines
installed annually
-- 1,860 ckm 2,010 ckm 2,044 ckm 2,121 ckm
Outputs: (i) Existing transmission system strengthened and expanded; (ii) existing distribution system strengthened
and expanded; and (iii) performance management and implementation improved
On June 21, 2018, ADB approved the change in the Program concerning revision of Disbursement Linked lndicators (DLls), results indicators and target values, among others.
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing (Continued) For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
8
The amended DLI matrix is as follows:
Indicator Prior Result (2015) 2016 2017 2018 2019
DLI 1: Number of PLN
customers in Sumatra
increase by at least
3,5% each year
-- At least 11.86
million by end
of 2016
At least 12.96
million by end
of 2017
At least 13.41
million by end
of 2018
At least 13.88
million by end
of 2019
DLI 2: Residential
energy sales grow by at
least 7% each year from
the preceding year
-- At least
16,848 GWh
At least
19,156 GWh
At least
20,496 GWh
At least
21,931 GWh
DLI 3: Number of
medium voltage ("MV")
feeder permanent
interruptions per 100 km
maintained at 2014
baseline level or
improved
-- Reduced to
less than
21.12 by end
of 2016
Reduced to
less than
21.08 by end
of 2017
Reduced to
less than
21.04 by end
of 2018
Reduced to
less than
21.02 by end
of 2019
DLI 4: Cumulative length
of 150 kV transmission
lines reconductored
25% of the contracts for
strengthening and
expansion of the
transmission system are
made effective in 2015
1,257 ckm by
end of 2016
2,225 ckm by
end of 2017
2,275 ckm by
end of 2018
2,361 ckm by
end of 2019
DLI 5: Additional number
of distribution
transformer units
installed annually
(i) the Borrower's
procurement performance
indicators agreed with ADB;
(ii) procurement baseline
data for the first half of 2015
collected and made
available to ADB; and (iii)
procurement performance
measurement targets for
2016-2019 agreed with ADB.
2,582
distribution
3,846
distribution
4,000
distribution
4,160
distribution
DLI 6: Additional length
of MV distribution lines
installed annually
-- 1,860 ckm 3,628 ckm 3,755 ckm 3,887 ckm
Outcome: Adequacy and reliability of power supply achieved for Sumatra
Outputs: (i) Existing transmission system strengthened and expanded; (ii) existing distribution system strengthened
and expanded; and (iii) performance management and implementation improved
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing (Continued) For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
9
Financing disbursement before re-allocation : i. ADB
Financing for
Prior Results 2016 2017 2018 2019 Total
Indicator US$ US$ US$ US$ US$ US$
DLI 1 -- 28,750 28,750 28,750 28,750 115,000DLI 2 -- 17,250 17,250 5,750 5,750 46,000DLI 3 -- 11,500 11,500 11,500 11,500 46,000DLI 4 57,500 28,750 28,750 28,750 28,750 172,500DLI 5 57,500 14,375 14,375 20,125 20,125 126,500DLI 6 -- 14,375 14,375 20,125 20,125 69,000
Total 115,000 115,000 115,000 115,000 115,000 575,000
ii. AIF
Financing for
Prior Results 2016 2017 2018 2019 Total
Indicator US$ US$ US$ US$ US$ US$
DLI 1 -- 1,250 1,250 1,250 1,250 5,000DLI 2 -- 750 750 250 250 2,000DLI 3 -- 500 500 500 500 2,000DLI 4 2,500 1,250 1,250 1,250 1,250 7,500DLI 5 2,500 625 625 875 875 5,500DLI 6 -- 625 625 875 875 3,000
Total 5,000 5,000 5,000 5,000 5,000 25,000
2. Basis of Accounting of the Special-Purpose Statements of Program Expenditures and Financing
a. Presentation of Statements of Program Expenditures and Financing
The special-purpose statements of program expenditures and financing have been prepared in the format and basis agreed between ADB and the Company. The special-purpose statements of program expenditures and financing were prepared for the purpose of complying with Section 4.04 of Project Agreement of ADB Loan 3339-INO and 8297-INO between ADB and the Company. The special-purpose statements of program expenditures and financing were compiled from account held by the Company which were prepared in accordance with Indonesian Financial Accounting Standards, therefore the special-purpose statements of program expenditures and financing only presents account that directly related to the Electricity Grid Strengthening Sumatra Program. The special-purpose statements of program expenditures and financing are presented in US Dollar (“US$”). The actual program expenditures denominated in Indonesian Rupiah are translated to US$ using the historical rate of transactions in which the actual program expenditures occur or exchange rate during reimbursement.
b. Basis for Withdrawal from the Loan Account The withdrawal table sets out the Loan amount available for withdrawal upon the Borrower’s achievement of the corresponding DLI targets as set out in the DLI Matrix. Except as otherwise condition that agreed by ADB, the withdrawal table shall form the basis for withdrawal from the Loan Account.
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing (Continued) For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
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i. ADB Financing for
Prior Results 2016 2017 2018 2019 Total
Indicator US$ US$ US$ US$ US$ US$
DLI 1 -- 28,750 28,750 28,750 28,750 115,000DLI 2 -- 17,250 17,250 17,250 17,250 69,000DLI 3 -- 11,500 11,500 11,500 11,500 46,000DLI 4 57,500 28,750 28,750 28,750 28,750 172,500DLI 5 57,500 14,375 14,375 14,375 14,375 115,000DLI 6 -- 14,375 14,375 14,375 14,375 57,500
Total 115,000 115,000 115,000 115,000 115,000 575,000
ii. AIF
Financing for
Prior Results 2016 2017 2018 2019 Total
Indicator US$ US$ US$ US$ US$ US$
DLI 1 -- 1,250 1,250 1,250 1,250 5,000DLI 2 -- 750 750 750 750 3,000DLI 3 -- 500 500 500 500 2,000DLI 4 2,500 1,250 1,250 1,250 1,250 7,500DLI 5 2,500 625 625 625 625 5,000DLI 6 -- 625 625 625 625 2,500
Total 5,000 5,000 5,000 5,000 5,000 25,000
On October 22, 2018, PLN sent a request letter to ADB to initiate the re-allocation to decrease excessive allocation in low-performing DLI 2 and increase allocation in high-performing DLI 5 and 6 approval from ADB regarding the loan re-allocation issued on December 4, 2018. This re-allocation is effective on November 26, 2018.
The amended allocation of DLI targets were as follow :
i. ADB
Financing for
Prior Results 2016 2017 2018 2019 Total
Indicator US$ US$ US$ US$ US$ US$
DLI 1 -- 28,750 28,750 28,750 28,750 115,000DLI 2 -- 17,250 17,250 5,750 5,750 46,000DLI 3 -- 11,500 11,500 11,500 11,500 46,000DLI 4 57,500 28,750 28,750 28,750 28,750 172,500DLI 5 57,500 14,375 14,375 20,125 20,125 126,500DLI 6 -- 14,375 14,375 20,125 20,125 69,000
Total 115,000 115,000 115,000 115,000 115,000 575,000
ii. AIF
Financing for
Prior Results 2016 2017 2018 2019 Total
Indicator US$ US$ US$ US$ US$ US$
DLI 1 -- 1,250 1,250 1,250 1,250 5,000DLI 2 -- 750 750 250 250 2,000DLI 3 -- 500 500 500 500 2,000DLI 4 2,500 1,250 1,250 1,250 1,250 7,500DLI 5 2,500 625 625 875 875 5,500DLI 6 -- 625 625 875 875 3,000
Total 5,000 5,000 5,000 5,000 5,000 25,000
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing (Continued) For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
11
c. Financing Disbursement The disbursement is based on the result of verification of DLI matrix by Independent Verification Agency (“IVA”). The verification is performed on every semester. For withdrawal process, the Borrower prepares withdrawal application and submits it to ADB. Disbursements are recognized based on the Withdrawal Authorization (“WA”) issued by ADB.
d. Plan Program Expenditures The plan program expenditures for respective provinces in Sumatera are presented based on ADB, and PLN estimation
e. Actual Program Expenditures Eligible Expenditures means the total expenditures incurred by the Borrower under the Program during its fiscal year minus the expenditures for (i) procurement of goods and service from countries which are not members of ADB, and (ii) any prohibited investment activites provided in Appendix 5 of ADB’s Safeguard Policy Statement, incurred by the Borrower under the Program during the same fiscal year. The unit within the Region of Sumatra paid to contractor for any transaction related to the Program with PLN budget (“APLN”). Regional Development of Sumatra (“PR-SUM”) who acts as Project Management Unit must screen the eligible expenses for reimbursement with ADB-RBL fund. Based on the approval from PR-SUM, the eligible expenses will be forwarded to Treasury Division and will transfer a certain amount of money from the defined deposit account related to ADB-RBL to PLN.
f. Deposit Account Prior to submitting the first application to ADB for withdrawal from the Loan Account, the Borrower shall nominate a Deposit Account at a commercial bank acceptable to ADB into which all withdrawals from the Loan Account shall be deposited. The Deposit Account shall be managed and liquidated in accordance with terms and conditions satisfactory to ADB. The Borrower has made a Deposit Account to deposit all withdrawal from ADB Loan 3339-INO and 8297-INO. The Account Number of the Borrower’s Deposit Account is 0193.02.000214.30.7 at Bank Rakyat Indonesia. The amount balance as of December 31, 2018 is US$1,698.
3. Allocation and Withdrawal of Loan Proceeds
Since the loan from ADB is already effective February 1, 2016, the company has withdrawn an amount financing according to DLI matrix amounting to US$463,859 million as of December 31, 2018, in regards to the condition, the Company has claimed a reimbursement for the actual expenses year 2018 amounting to US$165,858 in November 2018.
4. Actual Program Financing
Details of disbursement according to DLI are as follows: a. DLI 1
ADB AIF TotalUS$ US$ US$
Balance at beginning of year 53,658 2,342 56,000Additions 52,761 2,303 55,064
Total 106,419 4,645 111,064
Under the DLI matrix, actual disbursement for DLI-1 covers current year expenses to achieve the number targeted of PLN customers in Sumatra region.
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing (Continued) For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
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By the end of 2018, customers in the Sumatra region have reached 14.18 million or have reached the target planned by ADB of 13.41 million.
b. DLI 2
ADB AIF TotalUS$ US$ US$
Balance at beginning of year 17,250 750 18,000Additions 5,074 223 5,297
Total 22,324 973 23,297
Disbursement for DLI-2 represents disbursement for expenses which under the definition covers residential energy sales growth. Residential energy sales in 2018 amounted to 18,923 GWh or below the target set by ADB of 20,496 GWh.
c. DLI 3
ADB AIF TotalUS$ US$ US$
Balance at beginning of year 11,500 500 12,000Additions 11,500 500 12,000
Total 23,000 1,000 24,000
Under the DLI matrix, actual disbursement for DLI-3 covers number of feeder permanent interruptions per 100 Km maintained at 2014 baseline level or improved. By the end of 2018, number of feeder permanent interruptions per 100 Km amounted to 15.42 times per 100 Km, or reached the target set by ADB of 21.04 times per Km, this DLI has a declining polarity as a good assessment.
d. DLI 4 ADB AIF TotalUS$ US$ US$
Balance at beginning of year 93,914 4,086 98,000Additions 16,594 727 17,321
Total 110,508 4,813 115,321
Disbursement for DLI-4 represents disbursement for expenses which under the definition covers cumulative length of 150 kV transmission lines reconductored.
Cumulative length of 150 kV transmission lines reconductored at the end of 2018 amounted 2,337 ckm or has exceeded the target planned by ADB amounted 2,275 ckm.
e. DLI 5 ADB AIF TotalUS$ US$ US$
Balance at beginning of year 84,329 3,671 88,000Additions 15,583 678 16,261
Total 99,912 4,349 104,261
Actual disbursement for DLI-5 covers current year expenses related to additional number of distribution transformer units installed annually.
The additional number of installed distribution transformer units at the end of 2018 amounted 10,053 or has exceeded the target set by ADB of 4,000.
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing (Continued) For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
13
f. DLI 6 ADB AIF TotalUS$ US$ US$
Balance at beginning of year 24,913 1,087 26,000Additions 14,295 621 14,916
Total 39,208 1,708 40,916
Actual disbursement for DLI-6 covers current year expenses related to additional length of MV distribution lines installed annually. The MV distribution line length installed at the end of 2018 has reached 5,931 ckm or has exceeded the target planned by ADB of 3,755 ckm.
g. Financing for prior results ADB AIF TotalUS$ US$ US$
Balance at beginning of year -- -- --
Additions 43,110 1,890 45,000
Total 43,110 1,890 45,000
Withdrawals from the Loan account may be made, as set out in the withdrawal Table, for DLI targets achieved prior to the effective date but not earlier than 12. months before the date of this Loan Agreement, provided that the aggregate of such withdrawals shall not, at any time, exceed 20% of the Loan amount.
5. Financial Covenant Calculations
As per the loan agreement dated December 4, 2015, the Company is required to satisfy with the self-financing ratio, debt service coverage ratio and debt to equity ratio requirements as part of its compliance with financial covenants stipulated by ADB. Prior to December 31, 2018, ADB granted waiver No. SR-294/MK.08/2018 dated December 18, 2018 addressed to the Ministry of Finance of the Republic of Indonesia. The waiver relieves the Company from the requirement to comply with the aforementioned financial covenants effective until December 31, 2018.
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing (Continued) For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
14
Financial covenant calculations as of and for the year ended December 31, 2018, are as follows: i. Self-financing ratio (should be greater than 15%)
Rp million US$3
CASH FLOW FROM OPERATING ACTIVITIES1
Operating revenues
Cash receipts from customers2275.178.934 19.002.758
Government subsidy received256.507.588 3.902.188
Proceeds from sale of assets not used in operations2 88.550 6.115
Net non-operating income
Financial income2804.321 55.543
Subtotal 332.579.393 22.966.604
ALL EXPENSES RELATED TO OPERATIONS1
1. Total operating expenses2 308.188.889 21.282.293
Less non-cash expenses:
Depreciation2(30.744.712) (2.123.107)
Amortization2(221.851) (15.320)
Employee benefit2
(1.273.098) (87.915)
Bad debt expenses2(213.327) (14.732)
Allowance for inventories obsolence2(20.780) (1.435)
Income tax paid21.233.827 85.203
Net Total operating expenses 276.948.948 19.124.987
2. Debt service requirements
Interest expense paid219.730.285 1.362.495
Payment of bonds payable2914.000 63.117
Payment of two-step loans22.950.612 203.757
Payment of Government and non-bank
Government financial institution loans21.043.793 72.080
Payment of bank loans213.704.479 946.377
Payment of electricity purchase payable2368.142 25.422
Payment of KIK-EBA2630.600 43.547
Payment of lease liabilities25.186.938 358.189
Total Debt Service Requirement 44.528.849 3.074.9843. Decrease in working capital other than cash
ending working capital of the year
Total current assets2113.415.251 7.832.004
Total current liabilities2(152.022.396) (10.498.059)
Less: Cash and cash equivalents2(33.294.560) (2.299.189)
(71.901.705) (4.965.244)
Beginning Working Capital of the year
Total current assets293.797.251 6.477.263
Total current liabilities2(130.511.731) (9.012.619)
Less: Cash and cash equivalents2(42.291.959) (2.920.514)
(79.006.439) (5.455.870)
Decrease in working capital of the year 7.104.734 490.626
Cash dividends paid and other cash distributions of surplus2309.817 21.395
Subtotal 328.892.348 22.711.992
NET INTERNAL OF CASH 3.687.045 254.612
Annual average of PLN's capital expenditures incurred, or expected
to be incurred:1
Current Year
Additions in property, plant and equipment and construction in progress2100.273.650 6.924.498
Previous Year
Additions in property, plant and equipment and construction in progress285.210.519 5.884.298
Annual average of company's capital expenditures 92.742.085 6.404.398
Consolidated Self-Financing Ratio3 (Minimum 15%) 3,98% 3,98%
2018
PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA Electricity Grid Strengthening Sumatra Program – Results Based Lending Notes to Special-Purpose Statements of Program Expenditures and Financing (Continued) For the Year Ended December 31, 2018 (In thousands of US$, unless otherwise stated)
15
ii. Debt Service Coverage Ratio (at least 1.5)
Rp million US$3
OPERATING REVENUES1,2
Sales of electricity 263.477.551 18.194.707
Government's electricity subsidy 48.101.754 3.321.715
Compensation income 23.173.464 1.600.267
Customer connection fees 7.309.172 504.742
Others revenues 2.111.019 145.779
Less: Bad debt expenses (213.327) (14.732)
TOTAL OPERATING REVENUE 343.959.633 23.752.478
OPERATING EXPENSES1,2
Total operating expenses (308.188.889) (21.282.293)
Less: Non-cash expenses
Depreciation 30.744.712 2.123.107
Employee benefit 1.273.098 87.915
Bad debt expenses 213.327 14.732
Amortization 221.851 15.320
Allowance for inventory obsolence 20.780 1.435
TOTAL OPERATING EXPENSES (275.715.121) (19.039.784)
NET OPERATING INCOME 68.244.512 4.712.694
NON OPERATING INCOME1,2
Financial income 804.321 55.543
Other non-operating income 15.663.363 1.081.649
Income taxes (8.325.082) (574.897)
NET NON OPERATING INCOME 8.142.602 562.295
NET REVENUE 76.387.114 5.274.989
DEBT SERVICE REQUIREMENT
Interest paid 19.730.285 1.362.495
Principal repayments 24.798.564 1.712.490
TOTAL DEBT SERVICE REQUIREMENT 44.528.849 3.074.985
CONSOLIDATED DEBT SERVICE COVERAGE RATIO1 (MINIMUM 1.5) 1,72 1,72
2018
iii. Debt to Equity Ratio (Should not be greater than a ratio 75 to 25)
Rp million US$3
DEBT1
Two-step loans238.635.552 2.851.753
Government and non-bank Government financial institution loans27.204.278 531.760
Lease liabilities217.092.965 1.261.660
Bank loans2
181.111.734 13.368.153
Bonds payable and sukuk ijara2133.802.433 9.876.176
KIK - EBA loans22.907.986 214.643
Electricity purchase payable2
7.510.319 554.349
TOTAL DEBT 388.265.267 28.658.494
EQUITY1,2 927.413.857 68.453.931
CONSOLIDATED DEBT TO EQUITY RATIO3 (MAXIMUM 3 TIMES) 0,42 0,42
2018
Notes: 1). As defined in the ADB Loan 3339-INO and 8297-INO: Electricity Grid Strengthening Sumatera Program - Result Based
Lending Loan Facility Agreement dated December 4, 2015. 2). As derived from audited consolidated financial statements of the Company and its subsidiaries as of and for the year
ended December 31, 2018. 3). Translated using Bank Indonesia middle rate as of December 31, 2018.
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