Govt to help PLN, PGN pay debts
JAKARTA (JP): The government has agreed to provide US$173 million in bridging funds to help state electricity company Perusahaan Listrik Negara (PLN) and state gas distribution company Perusahaan Gas Negara (PGN) pay outstanding power and gas debts.
Secretary-General of the Ministry of Mines and Energy Darmoko Slamet said yesterday the money was enough to cover the companies' outstanding payments to their power and gas suppliers through this month.
He said the government, however, would not continue to help pay the companies' bills in future months.
"PLN and PGN have to think about ways to meet their payment obligations for the following months," said Darmoko, who is also vice chairman of the subministerial task force handling gas and power affairs.
"Maybe they have to negotiate with their gas and power suppliers on terms of payment which allow them to pay their bills in installments," he added.
PLN has announced that it has been unable to buy power and gas from independent power producers and gas contractors at the rupiah's current exchange rate.
Prices of both gas and power are based in dollars, which have appreciated in value against the rupiah by about 300 percent since the financial crisis hit the country in July.
PLN says the crisis has brought the company to the edge of bankruptcy because it must buy gas and power in dollars while selling power to the public in rupiah.
It suffered a Rp 334 billion loss in the second half of last year and projects a Rp 1.3 trillion loss this year.
PLN sells power at Rp 170 (1.8 US cents) per kilowatt hour (kwh). Under its purchase agreements with its power suppliers, it must buy power at between 5.74 cents and 8.4 cents per kwh.
PLN has signed purchase agreements with 26 independent power producers, but only PT Dayak Bumi Salak Pratama, which owns the 165-Megawatt (MW) geothermal power project in Salak, West Java, and PT Energy Sengkang, which owns the 135-MW geothermal power project in Sengkang, South Sulawesi, have come on line.
PGN has also refused to buy gas at the current exchange rate and unilaterally set its gas payment rate at Rp 5,000 per dollar.
Power and gas suppliers have filed complaints with the government over the actions of PLN and PGN.
Atlantic Richfield Indonesia Inc., the main gas supplier to PLN's power plants in Java, has reportedly threatened to withdraw a $520 million standby letter of credit if PLN defaults on its gas payments through March 23.
The suppliers reportedly insist on receiving payments for their power and gas in full at the current exchange rate.
Darmoko said the Ministry of Finance would transfer the bridging funds to PLN and PGN as soon as possible so that both companies could meet their payment deadlines.
The ministry says the funds are a loan, which will be payable in three years with a low interest rate.
"Most of the money will go to PLN," Darmoko explained. (jsk)