PLN to avoid tariff hike despite rising fuel prices<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
State-owned electric company PT PLN said that its power
\ngeneration costs could increase by Rp 8.5 trillion (US$944
\nmillion) if the government goes ahead with its plan to hike
\ndomestic fuel prices by 40 percent next year.<\/p>\n
Despite a possible surge in its operational costs, the company
\nhas promised not to burden the public by raising its rates as
\nwell, provided that the government helps secure the supply of
\nliquefied natural gas (LNG) for its combined-cycle power plants.<\/p>\n
"It would also help if the government reduces the import
\ntariffs on equipment we need to develop and maintain our power
\nplants," PLN president director Eddie Widiono told reporters on
\nthe sidelines of an electric power seminar on Friday.<\/p>\n
"Meanwhile, for PLN's part, we will try to cut down on the oil
\nconsumption at our power plants, and increase the efficiency of
\nour operations to prevent further losses."<\/p>\n
PLN has planned to reduce its use of oil to less than 5
\npercent by 2006, by phasing out its diesel-powered generators
\nwith combined-cycle coal- and gas-fired power plants.<\/p>\n
PLN said it would require Rp 29 trillion this year to buy
\ncrude oil, coal and LNG to run its power plants. Crude oil makes
\nup the bulk of that at Rp 14 trillion.<\/p>\n
Past experience shows that an increase of Rp 100 in fuel oil
\nprices translates into an increase of PLN's annual spending by Rp
\n2 trillion. By using LNG, the company could save between Rp 10
\ntrillion and Rp 15 trillion annually.<\/p>\n
Lack of LNG, however, has forced PLN to switch to fuel oil to
\nrun many of its combined-cycle power plants, which have also
\nreduced the life span and performance of its power plants as
\nwell.<\/p>\n
PLN and state-owned gas company PT PGN are currently
\nconstructing LNG terminals and transmission pipes from Sumatra to
\nsupply PLN's main power plants in West Java.<\/p>\n
Eddie acknowledged that it would be a tough challenge for PLN
\nnot to raise electricity rates, as the estimated additional power
\nproduction cost would only come from the direct effects of the
\nfuel hike alone.<\/p>\n
"It has not included the possible rise in transportation fees
\nof coal and gas supplied to our power plants, or the possible
\nhike in the regional minimum wages," he said.<\/p>\n
Another possible alternative to prevent a rate hike, Eddie
\nsaid, was therefore to postpone the time PLN was supposed to
\nachieve its breakeven point, which was planned for next year.<\/p>\n
"PLN does not want to continue suffering losses, but the
\ngovernment could let it do so for the next two years to prevent a
\nrate hike," he said.<\/p>\n
PLN reported a loss of Rp 3.74 trillion in the first half of
\n2004, and a loss of Rp 2.85 trillion in the same period last
\nyear.<\/p>\n
It also booked a foreign exchange loss of Rp 1.68 trillion
\nduring the period, after a gain of Rp 1.25 trillion a year ago.<\/p>",
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