Thu, 05 Oct 2000

October set as time to negotiate power rates

JAKARTA (JP): State-owned power company PT PLN said on Wednesday that the offer to negotiate power rates with its industrial users would end this October.

"It means that anyone who doesn't have the goodwill to negotiate with us, they're done, they risk disconnection," Corporate secretary Murtaqi Syamsuddin was quoted as saying by news agency Antara.

He was responding to protests by a delegation of laborers from West Java textile factories, who demanded PLN not cut power, as 53,000 workers depended on the factories continued operation.

Murtaqi said that PLN had to take stern measures, because the company was barely able to operate.

"Our current capital of Rp 1.9 trillion (US$218 million) as of June 2000, is very worrisome. Before the crisis in 1997, our capital stood at Rp 30 trillion," he explained.

The government raised power rates in April by an average of 29.43 percent. The rise in the rate for industrial users, however, reached between 53 percent and 76 percent.

In response to the hike, several industrial associations protested the decision with the Indonesian Textile Association (API) threatening to refuse payment. Many of them have not paid their bills.

But Murtaqi said that the government and the House of Representatives only agreed on raising power rates to prevent PLN from going bankrupt.

PLN suffered losses of Rp 11.3 trillion in 1999, which during the first semester of this year swelled to Rp 11.58 trillion.

Although PLN's earnings rose, the weaker rupiah against the US dollar caused power prices of independent power producers (IPP) to jump four fold compared to the same period in 1999.

The company buys electricity from the IPPs at an average price of 5.5 US cents or about Rp 478 per kilowatt hour (KwH), but resells it to the public at an average of Rp 250 per KwH.

However, he added, the power cut after October, would not apply to companies that were showing goodwill, such as signing a debt agreement with PLN on the unpaid electricity bills.

According to him, companies agreeing to pay the higher power rates, include PT Petrokimia Gresik, PT Indocement Tunggal Prakarsa, PT Gudang Garam, PT Semen Gresik, PT Semen Tuban I,II, and III, and PT Semen Cibinong.

Whereas companies still in negotiation are PT Indo Bharat Rayon, PT Elegant Textile Industry and PT Semen Padang.(bkm)