PLN workers threaten to strike<\/p>\n
Fitri Wulandari , The Jakarta Post, Jakarta<\/p>\n
Employees of state-owned electricity company PT PLN have
\nthreatened to strike if the government goes ahead with plans to
\nsell the company's core business.<\/p>\n
Ahmad Daryoko, chairman of PLN labor union, argued that the
\nsale of the company's core business would burden the public with
\nskyrocketing power rates.<\/p>\n
Ahmad referred to a letter signed by Director General of
\nElectricity and Energy Utilities Luluk Sumiarso which instructs
\nPLN to unbundle its transmission, distribution and power plant
\nunits into separate entities.<\/p>\n
The letter said the unbundling process should start on Nov.
\n27, 2003 as stipulated in Electricity Law No. 20\/2002.<\/p>\n
\"This is an entry point for the government to spin off power
\nplants and retailing operations in Java and Bali from PLN,\" Ahmad
\nsaid in a statement.<\/p>\n
The list of core businesses to be spun off from PLN are power
\nplants, power transmission, power distribution, power sales,
\npower sales agents, management of the power market, and power
\nsystem.<\/p>\n
Ahmad said once the units become separate entities, it would
\nallow the government to sell them to private investors.<\/p>\n
\"If this happens, the process of selling power will be done by
\ntoo many companies. Eventually it will raise power prices,\" Ahmad
\nsaid.<\/p>\n
Ahmad warned if the government did not cancel the plan by Nov.
\n27, PLN workers nationwide would go on strike. During the strike,
\nthe firm's workers would not provide services to the public
\nincluding responding to calls if there were power disruptions.<\/p>\n
\"We apologize to the public for the strike,\" Ahmad said,
\nadding that some 48,000 PLN workers nationwide will join the
\nstrike.<\/p>\n
The strike, if it materializes, will predictably create chaos
\nand anger as it will take place when the entire country is still
\ncelebrating the Muslim holiday Idul Fitri. The holiday will fall
\non Nov. 25 and Nov. 26.<\/p>\n
Based on the power law, the country's power sector should be
\nliberalized to allow the private sector to manage the business
\nranging from operating power plants to becoming power sales
\nagents.<\/p>\n
The law also says when liberalization starts in 2007, PLN is
\nnot allowed to dominate power generation in the \"competition
\narea\", that is areas which are considered ready for
\nliberalization.<\/p>\n
Java and Bali are considered to be the first candidates to
\nbecome competition areas in 2007 given their huge population,
\nstrong power demand and huge power generation. Both islands now
\nconsume about 80 percent of the country's total power generation
\ncapacity of 21,000 megawatts (MW).<\/p>\n
Some fear that the liberalization would cause power rates to
\nskyrocket since power will be sold by producers to end users
\nthrough a chain of agents.<\/p>\n
Media reports also said that the unbundling of PLN core
\nbusinesses was part of the agreement for a US$242.6 million loan
\nsigned by the government and the World Bank in early October.<\/p>\n
The loan was to help finance a number of projects, including
\npower, gas distribution and health care.<\/p>\n
Around half of the loan, or $141 million, would be used to
\nhelp finance a number of power projects in Java and Bali.<\/p>\n
PLN badly needs a capital injection as it has not made any
\ninvestment in power infrastructure since the economic crisis in
\n1998. Inefficiency meant PLN could not make any further
\ninvestments in infrastructure leading to a power crisis in Java
\nand Bali.<\/p>\n
However, in return, PLN must carry out a number of measures.
\nAmong other things, PLN must restructure two of its most
\nlucrative business units -- PT Indonesia Power and PT Pembangkit
\nJawa Bali (PJB).<\/p>\n
Both companies provide 80 percent of power supply for Java and
\nBali.<\/p>\n
The bank asked PLN to group power plants run by both companies
\ninto four or more subsidiaries by the end of 2006.<\/p>\n
PT Indonesia Power currently has 132 power plants with a total
\ncapacity of 9,040 MW or half of total installed capacity for the
\nJava-Bali power system. PJB owns Muara Karang power plant,
\nCirata, Gresik, Brantas, Paiton with a total capacity of around
\n4,300 MW.<\/p>\n
Analysts said with such a huge market, it is not surprising
\nthe company would attract investors.<\/p>\n
Ahmad added unbundling PLN's core business would cause
\nimbalance in investment between Java and outer islands.<\/p>\n
\"Investors would only look at Java and Bali and overlook other
\nislands. Who wants to invest in places that do not promise
\nprofit?\" Ahmad remarked.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pln-workers-threaten-to-strike-1447899208",
"image": ""
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"sponsor": "Okusi Associates",
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