Southeast Asia power utility reform essential: Consultant<\/p>\n
SINGAPORE (Dow Jones): Policy-makers in Indonesia, Thailand
\nand Malaysia should put restructuring of their state-owned power
\nutilities at the top of their agendas to address their severe
\npayment crises, an industry consultant said on Tuesday.<\/p>\n
\"Managing commercially unattractive power purchase agreements
\nand excess capacity from existing and committed expansions are
\nmajor issues facing the national power companies and regulators
\nin Asian markets,\" said Ullrich Waeltken, leader of the energy
\npractice for the Boston Consulting Group.<\/p>\n
Waeltken said the countries' power sectors face a financial
\n\"Catch-22\" following their national currency depreciations
\nagainst the U.S. dollar, which results from five factors: power
\npurchase agreements in dollars; fuel contracts in dollars;
\nunhedged borrowing in dollars; electricity prices in local
\ncurrency, often at subsidized rates; and a decline in power
\ndemand.<\/p>\n
As a result, Perusahaan Listrik Negara of Indonesia,
\nElectricity Generating Authority of Thailand and Tenaga Nasional
\nBhd. of Malaysia urgently need to be restructured, he said.<\/p>\n
In Indonesia, the Power Sector Restructuring Policy launched
\nAug. 25 is a significant step forward for PLN, which this week
\nrecorded a first-half 1998 loss wider than twice its first-half
\nrevenue. But the policy is untested and needs to be coupled with
\nfuel subsidy reductions and a master plan for development of the
\ncountry's natural gas resources, Waeltken said. In particular,
\nsubsidized diesel burned in power plants should be replaced with
\ngas.<\/p>\n
In Thailand, EGAT is overcoming union opposition to raise cash
\nthrough asset sales, including the recent $240 million sale of 15
\npercent in its Electricity Generating Co. affiliate.<\/p>\n
In Malaysia, Tenaga is likely to sell up to a 30 percent stake
\nto an overseas buyer to meet cash-flow requirements, Waeltken
\nsaid.<\/p>\n
In all countries, when power purchase agreements aren't viable
\nany more, they will have to be renegotiated as the governments
\nlack the funds to fund payment gaps.<\/p>\n
Waeltken was in Bangkok to meet with senior officials from
\nEGAT and Petroleum Authority of Thailand.<\/p>",
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