Wednesday 26 January 2011

GOVERNMENTS GUARANTEE ENCOURAGES BANKS TO EXTEND CREDIT TO REGIONAL DRINKING WATER COMPANIES

Although track record of the Regional Drinking Water Companies (PDAM) had been unimpressive, as indicate by the high degree of stagnation in debt settlement, Bank BNI took the courage of extending credit to those PDAM companies.

Apart from Government’s guarantee, BNI willingness to extend credit was because some PDAM had shown good performance, the company being well managed, the management had shown effective managerial competence and run effective business operations, that the infrastructure building of a nation. Krisna Suparto, Director of Business Banking BNI disclosed to BusinessNews on the occasion of signing of credit for drinking water at the office of Director General Cipta Karya, Ministry of Public Works, Friday (11/6).

Credit for PDAM had been extended by BNI before, but the credit was not directly pipelined to the company, but through the Government instead. The credit, worth Rp 33 billion was used by the Government to finance 45 PDAM. With the present credit BNI directly channeled the loan to PDAM with interest borne by the Government. “So PDAM returns the loan to bank based on 6 month SBI bond by the time of credit agreement, while the Government pays the margin” Krisna remarked.

Beside PDAM, BNI also extended credit for toll road projects. The amount of credit extended to free way building projects had now reached Rp 1.5 trillion, of the targeted Rp 6 trillion. However, the extention of credit for toll road projects was felt as slow moving due to problems in land clearing, in spite of the land capping and Board of General Service (BUU).

This year the credit targeted for toll road projects amounted to Rp 3 trillion, including the sections of Semarang-Solo, Solo-Kertosono, Surabaya-Mojokerto, whilst the target of Rp 6 trillion would be extended to finance toll road sections of Trans Java Highway.

Director General of Cipta Karya : Change the Thinking Attitude of PDAM

Boedi Yuwono, Director General of Cipta Karya stated that the involvement of banks in PDAM financing might as well changed the thinking platform of PDAM, who had always been helped by way of mouth-feeding by the Government whether through State Budget or overseas loan. With direct loan from the bank, PDAM was expected to be more independent.

In this connection, through the Joint Financing Agreement of three banks, respectively Bank BNI, Bank BRI and Bank Jabar Banten credit of Rp 3.7 trillion had been extended as initial realization of the Acceleration Plan of drinking water procurement for urban areas. The credit scheme for drinking water Procurement Plan was being supported by guarantee and interest subsidy at the maximum amount of 5% from the Government.

The vast amount of fund was allocated for credible and qualified PDAM. Furthermore if the fund was felt as insufficient, the Government would add more credit. Today, of the 392 PDAM operating in Indonesia, 96 units were undergoing the process of application for credit restructurization at the Ministry of Finance. Of 15 PDAM whose status was healthy, 5 of them were ready to receive financing, i.e. PDAM of Malang, the Regencies of Tasikmalaya, Bogor, Tangerang, and Bandung.

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