Jakarta

PT PLN signed Wednesday a loan agreement worth US$615 million with China Exim Bank to finance the construction of two power plants in Java.

Under the agreement, the bank will provide loans of $330.8 million for the 600-megawatt (MW) Suralaya coal-fired power plant in Banten, and $284 million for the 600-MW Paiton coal-fired power plant in East Java.

The loans will be insured by Sinosure, the Chinese Export Credit Agency, and backed by a full guarantee by the Indonesian Finance Ministry.

At the same day, thousands of PLN workers staged a rally outside the State Palace rejecting the results of the company's shareholders meeting on Jan. 8. Shareholders are resolving to spin off two subsidiaries, PT Indonesia Power and PT PJB. The proposed plan is in line with the government's restructuring plan for the state electricity provider.

The restructuring plan was initially proposed by the State Ministry for State Enterprises. It aims to improve the performance of the two units, possibly paving the way for privatization. The PLN union objects to any privatization. (JP)