Wijaya Karya asks for Rp2 trillion in state equity participation
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Wijaya Karya minta PMN Rp2 triliun
9 July 2024
By Muawwan Daelami
Jakarta, ID – PT Wijaya Karya Tbk (WIKA) is requesting state equity participation (PMN) to the State-owned Enterprises (SOE) Ministry and the Finance Ministry for fiscal year 2025 worth Rp2 trillion to improve its capital structure.
“We are requesting [PMN]. We have submitted the request to the SOE Ministry. The SOE Ministry has coordinated with the Finance Ministry,” WIKA Corporate Secretary Mahendra Vijaya told Investor Daily in Jakarta recently.
Mahendra said that the PMN amount WIKA requested reached Rp2 trillion. This amount is in line with the amount approved by shareholders. So, the request for Rp2 trillion PMN can be treated as a follow up to the Rp8 trillion PMN in fiscal year 2023 that WIKA should have received.
In fiscal year 2023, WIKA was poised to receive PMN worth Rp8 trillion. However, this amount was denied, and the company was only approved to receive PMN worth Rp6 trillion through a rights issue.
The Rp6 trillion PMN will be used by WIKA to complete 41 national strategic projects (PSNs). The funds are scheduled to be disbursed in the first half of 2024 at the latest. Meanwhile, Mahendra stated that the Rp2 trillion PMN requested by the company for fiscal year 2025 would be used to strengthen the company’s capital structure.
“The point is that the loan burden is disrupting the existing working capital, so the PMN will be used to strengthen the working capital. It cannot be used to cover the existing burden. So, the PMN will be used to strengthen the capital structure,” he explained.
Jumbo receivables
Referring to the consolidated financial report for the first quarter of 2024, the construction SOE still has a jumbo debt of Rp56.24 trillion, including Rp17.48 trillion of short-term debt and Rp38 trillion of long-term debt. Meanwhile, the company has receivables worth Rp3.37 trillion with Rp1.46 trillion from related parties and Rp1.91 trillion from third parties. Meanwhile, its retention receivable reached Rp1.46 trillion and uncollected receivable Rp811 billion up until the first quarter of 2024.
Due to the company’s load, Mahendra said that the company was currently focused on projects with a monthly progress payment scheme.
Therefore, the company no longer works on projects with a down payment scheme. This is implemented so that the company no longer has long-standing receivables. The company is currently disbursing its receivables from completed projects worth more than Rp1 trillion.
Besides that, Mahendra said that the company would also focus on organising its portfolio by refocusing on its core competencies, namely infrastructure and engineering, procurement, construction, and commissioning (EPCC). Both competencies are the backbone of WIKA’s revenue.
The company’s investment asset portfolio outside of these competencies will be sought to be sold. For example, the Serang-Panimbang toll road and Jatiluhur SPAM (Drinking Water Supply System) managed by its subsidiary, PT Wika Itrta Jaya Jatiluhur. When both projects are completed, the company will potentially look to divest them.
“Businesses that are not in line with WIKA’s core competencies will be divested. We will see if that is possible,” Mahendra stated.
New contracts
As of May 2024, WIKA has secured new contracts worth Rp8.86 trillion that are mostly from the industrial segment, the infrastructure and buildings segment, the property segment, and the EPCC segment. Mahendra affirmed that his company was optimistic about securing new contracts worth around Rp28-30 trillion this year. The contracts the company are pursuing are allocated funding from the 2024 state budget (APBN), not the 2025 APBN. “The contracts that we are pursuing are already allocated funding. Moreover, projects from SOEs and private companies have already implemented financial closing,” he added.
