Electricity firm may lose $1.87b this year
JAKARTA (JP): State electricity company PT PLN may lose Rp 13.7 trillion (US$1.87 billion) during the 2000 fiscal year beginning in April, Minister of Mines and Energy Susilo Bambang Yudhoyono warned on Tuesday.
"But these losses could be cut to only Rp 4.04 trillion if PLN could reduce its financial obligations to independent power producers (IPP), raise electricity rates and improve efficiency," Bambang told a hearing with House of Representatives Commission VIII for mines and energy.
He said the state company expected to save Rp 5.1 trillion in payments to IPPs, and another Rp 759 billion through its efficiency program.
PLN expects an additional income of Rp 3.9 trillion by raising the electricity rates by 29.3 percent, Bambang added.
PLN's new president, Kuntoro Mangkusubroto, said PLN's financial obligations to IPPs would reach Rp 9 trillion in the 2000 fiscal year ending in December.
But the company hopes to cut the financial obligation by Rp 5.1 trillion to Rp 3.9 trillion through negotiations, he added.
He said that apart from PLN's Rp 9 trillion financial obligation to the IPPs, the government also had to pay US$290 million in compensation to the United States government following PLN's defeat in the international arbitration court in its dispute with American IPP MidAmerican Energy Holdings Co.
MidAmerican, formerly known as CalEnergy, which developed the Dieng geothermal power project in Central Java and the Patuha power project in West Java, filed an arbitration suit against PLN following the latter's failure to comply with its power purchase agreements with the former.
The court ruled in favor of MidAmerican last year, obliging PLN to pay MidAmerican $572 million in damages.
The United States government-owned insurance company Overseas Private Investment Corporation (OPIC), which insured both projects, has reportedly paid $290 million in claims to MidAmerican.
OPIC, through the U.S. government, has reportedly asked the Indonesian government to reimburse the insurance claim.
"It is considered the financial obligation of the Ministry of Finance rather than PLN," Kuntoro said.
Oil
On the sidelines of the hearing, Bambang said Indonesia would support a slight increase in crude oil production by the Organization of Petroleum Exporting Countries (OPEC) in order to meet growing demand in international markets and to stabilize prices.
Bambang said Indonesia wanted to see a stable oil price of between $22 and $26 a barrel.
"What we need is a stable price, between $22 and $26," he said. "If the price is stabilized at that level, we will be happy."
He said Indonesia would back an increase if OPEC ministers decided at their March 27 conference in Vienna that this was the most effective means to stabilize the market.
Bambang stressed, however, that Indonesia would also agree to maintain current output levels if OPEC so decided.
"There's still six weeks before the meeting and the price may fluctuate before that time," he said.
"If OPEC decides it doesn't need to increase production, Indonesia wouldn't have any objections."
Indonesia expects Rp 37.4 trillion in oil and gas revenue in the 2000 fiscal year based on the average oil price assumption of $18 per barrel and a rupiah rate of Rp 7,000 per U.S. dollar.
Indonesia currently produces 1.46 million barrels per day of oil and condensate.
Bambang said every $1 rise above that level would add Rp 1.3 trillion in revenue to the government's coffers.
Crude oil prices climbed above $30 a barrel on Monday on the New York Mercantile Exchange for the first time since the Gulf War after an OPEC official said production cuts might be extended. (jsk/03)