Rules could make PLN subsidiaries' IPOs 'unattractive'<\/p>\n
JAKARTA (JP): The government's tight control of electricity
\ngeneration and distribution could make the initial public
\nofferings (IPO) of the state-owned PT Perusahaan Listrik Negara's
\n(PLN) two subsidiaries unattractive to investors, a PLN executive
\nsaid yesterday.<\/p>\n
PLN's president, Djiteng Marsoedi, said although the size and
\nmanagement of a company greatly determined the success of its
\nIPO, investors usually looked at the prospects before deciding to
\nbuy its shares.<\/p>\n
"In our case, where infrastructure facilities are involved,
\nthese prospects are determined more by government policies rather
\nthan market supply and demand," Djiteng told House Commission VI
\nfor industry, mining, manpower and investment.<\/p>\n
"Thus, only a good business environment supported by sound
\ngovernment regulations can guarantee the listing's success," he
\nsaid.<\/p>\n
He said such a climate had yet to be created in Indonesia
\nbecause government regulations heavily regulated PLN's two
\nsubsidiaries, PT Pembangkitan Listrik Jawa-Bali (PJB) I and II.<\/p>\n
The two subsidiaries, part of the state-owned companies now
\nbeing prepared to float their shares on the capital market, are
\nrequired to market their entire power supplies to PLN.<\/p>\n
"If PLN, as the single buyer and marketing agency, is
\ndisturbed by the growth of captive power or if industries don't
\ngrow as fast as they are expected to, the sales of PJB's power
\nsupply will also be slow," he said.<\/p>\n
Captive power is the generation of electricity by individual
\ncompanies or nonsubscribers of PLN.<\/p>\n
Djiteng said PJB's gas procurement for the generation of its
\npower plants were bound by contracts which required PJB to "take
\nor pay".<\/p>\n
"In the last few years, PJB I and PJB II have had to pay a
\ndeposit because their fuel procurement failed to reach the
\nminimum level stipulated in the contracts," he said.<\/p>\n
Djiteng said that while Indonesia had a growing market for
\nelectricity, it had to be shared between PLN and private
\ncompanies.<\/p>\n
"At the same time, there is no clear guideline on how big the
\nrole of the private sector and captive power are in providing
\npower supplies," he said.<\/p>\n
Djiteng said Law No. 15, 1985 on electricity needed revision
\nto clarify PLN's and the private sector's roles under the
\nNational Electricity Plan.<\/p>\n
Djiteng said PJB I and PJB II were being assessed by legal
\nconsultants and financial advisors to strengthen their management
\nand portfolios.<\/p>\n
House member Iskandar Mandji said that if PLN felt the climate
\nwas not favorable, it should postpone the listing of PJB I and
\nPJB II.<\/p>\n
"This is better than having regrets in the future," he said.<\/p>\n
PJB I, established by PLN in late 1995, manages the Suralaya
\ncoal-fired plant and the Saguling hydropower plant, both in West
\nJava, the Tambak Lorok steam power plant in Semarang and steam
\nand gas power plants in Bali.<\/p>\n
PJB II manages PLN's other power plants, including the Paiton
\ncoal-fired power plant, the Karangkates hydropower plant, the
\nGresik steam power station, the Grati steam power plant, all in
\nEast Java, and the Cirata hydro-power plant in West Java.<\/p>\n
The private sector is currently allowed to establish power
\ngenerating plants for its own needs and to sell to the public.<\/p>\n
PLN alone manages fuel, coal and gas power plants with a total
\nproduction capacity of 15,940 MW.<\/p>\n
Non-PLN plants, which include the Jatiluhur Authority Project,
\nPT Cikarang Listrindo, PT Inalum, PT Inco and PT Aji Ubaya,
\nproduce 356 MW of electricity which they sell to PLN, which
\ndistributes it.<\/p>\n
Another 23 private companies and consortiums have signed power
\npurchasing agreements with PLN and are expected to start
\noperating next year. These companies have a generating capacity
\nof 7,925 MW and sell their electricity to PLN for between 5.7
\nU.S. cents to 9.8 cents.<\/p>\n
Twelve more private projects are being negotiated with a
\ncapacity of 3,368 MW.<\/p>\n
Djiteng said that by 2002 Indonesia would have a power surplus
\nof 191 MW, or about 1 percent of the 19,000 MW total demand.
\n(pwn)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rules-could-make-pln-subsidiaries-ipos-unattractive-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}