RAKING IN RP 20.8 TRILLION IN GLOBAL BOND FUNDS: Pelindo II Injects Rp 8 Trillion to New Priok Port

May 11, 2015, Investor Daily, Page 8, Section: Infrastructure & Transportation

SUKABUMI – PT Pelabuhan Indonesia (Pelindo) II will allocate Rp 8 trillion of the proceeds from the issuance of global bonds worth US$ 1.6 billion, or equivalent to Rp 20.8 trillion, to complete the construction of the Port of New Priok. Such an amount of funds will be disbursed in stages starting this year.

“The allocation of bond funds to New Priok is divided partially in the next three years, namely Rp 4 trillion in 2015, then next year Rp 2 trillion and another Rp 2 trillion in the following year,” said Finance Director of PT Pelindo II [or IPC], Orias P Moedak, during a media gathering in Sukabumi, West Java,
last weekend.

With this additional funding, he continued, the total funds that have been allocated to complete the New Priok Port, or Kalibaru Port, reaches Rp 12 trillion. Previously the company has allocated Rp 4 trillion for this project.

Orias said further that the remaining bond proceeds amounting to Rp 7 trillion will be allocated to build and develop Tanjung Carat Port, Sorong Port (Rp 3.5 trillion), Kijing Port, and Cirebon Port (Rp 1.2 trillion). “The funds will be allocated in stages. All the construction and development of the ports begin this year,” he said.

Orias explained that Pelindo II is concentrating the bond fund distribution to all the ports because the majority of investors want to invest in those projects.

In addition to all those ports, his company also will distribute the bond issuance proceeds to the development of Cibitung Bekasi Laut Canal in September 2015. The investment is included in the remaining amount of bond funds of Rp 5.08 trillion.

Positive sentiment
He estimated that the proceeds of this bond issuance will be fully spent by the first quarter of 2017. The total global bond funds of US$ 1.6 billion obtained by IPC are divided into two series. The first series of global bonds worth US$ 1.1 billion carries a maturity period of 10 years with an interest yield of 4.25 percent and 4.375 percent. The second series valued at US$ 500 million with term of 30 years carries interest rates of 5.375 percent and 5.5 percent. These two series were issued on 5 May 2015.

The funds were secured after the company conducted a road show to Hong Kong, Singapore, London, New York, Boston, and Los Angeles. IPC appointed three banks, namely ANZ, BNP Paribas and Citigroup, as well as two local securities firms, PT Bahana Securities and PT Danareksa Sekuritas.

“This is for the first time in the history of global bond issuance undertaken by a state-owned enterprise (BUMN); IPC has recorded history with the lowest interest rate of only 50 basis points above the yield on government bonds, with the largest initial public offering,” said Orias.

According to him, while economic growth in Indonesia has been decreasing, this transaction is proof of positive sentiment of investors towards Indonesia and full support for the priority sector of the state, especially for the development of infrastructure and long-term investments that are considered strategic. “The high interest of investors shows their confidence in the projects that IPC is undertaking and will undertake,” he explained.

Operating
Meanwhile, President Director of PT Pengembang Pelabuhan Indonesia (PPI), Dani Rusli Utama, said that, until now, the construction progress of Terminal I (CT 1) of New Priok Port has reached 86 percent completion. The company is targeting commercial operation of this terminal in January 2016, after a soft opening planned for September 2015.

“We will conduct a trial operation in September or October. The purpose of this trial operation is to convince the large vessels that they can anchor at Terminal I smoothly,” said Dani.
 
Currently, PT PPI is awaiting the arrival of four container cranes, which are planned to arrive at the end of May 2015. In addition to the four container cranes, continued Dani, the company is also awaiting 10 units of rubber tyred gantry (RTG) cranes, which are projected to come in the period from May to August 2015.”

The container cranes are to pull the containers at the docks. Meanwhile, the RTG cranes are to pull containers in the container yard,” said Dani.

Overall, he explained, the superstructure facilities in Terminal I of New Priok have cost US$ 120 million. The breakdown is as follows: eight container cranes, 20 RTG, 60 terminal tractors, one reach stacker, as well as two empty container handling [machines]. The financing of these superstructure facilities is sourced from the Terminal 1 operator of New Priok.

Terminal I of New Priok will be operated by the consortium of Mitsui & CO., Ltd., PSA (Port Singapore Authority) and NYK (Nippon Yusen Kaisha). Seventy percent of the funding comes from the consortium and the remaining 30 percent is sourced from Pelindo (IPC). “Meanwhile, container terminals 2 and 3 are still in the bidding process. Perhaps at the end of this year or early next year already it will be known who will be the operators,” added Dani.

According to him, the operation of each terminal is done in stages by way of looking at the utilisation of each terminal. This certainly intersects with the revenue earned by each operator in each terminal. “We also have to maintain supply and demand, and also must act fairly to all the parties,” he added.

On another aspect, Dani said, there have been some delays in the first phase construction process of the Port of New Priok. One of the causes is its land access, which has been hampered for several years. However, according to him, this matter has been communicated to the government.

“We have been talking to the government about this matter (the delay). There are two important things. First, the Port of Tanjung Priok does not experience stagnation in serving the loading and unloading of vessels. Second, the New Priok Port project has not stalled,” he said.

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