The Asset Triple A Awards 2012
Best Trade Finance Solutions: Indonesia
Arranger: DBS Bank
The state-owned oil and gas company Pertamina secured a US$100 million financing facility to fund its procurement of crude oil as well as for the purchase of spare parts and other goods used in exploration and production activities.
Pertamina: Filling station in Bali, Indonesia |
The financing solution crafted by DBS Bank is not using letters of credit (L/Cs) as the basis for financing, thus providing the company with cheaper transaction cost. It streamlines the process flow and reduces the documentation hurdle for the firm, enabling a faster processing time.
The structure likewise benefits Pertamina in terms of extending their days payable outstanding. Previously, the company had to issue a sight L/C to its suppliers, but it can use open account with extended payable days to 180 days, enhancing its cash flow and optimizing its working capital.
It also enjoys improved liquidity on its working capital with pre-agreed transactional charges at a competitive rate.