PLN $105m short on gas, power payments

JAKARTA (JP): State electricity company PLN has failed to make payments on US$105 million owed for gas and power supplies over the past two months, its president said yesterday.

Djiteng Marsudi said PLN had requested the Ministry of Finance inject subsidies to help the cash-strapped company meet its financial obligations, but the ministry had yet to disburse the money.

"Anyway, the government has promised to give subsidies to PLN this year," Djiteng told reporters after a hearing with the House of Representatives' Commission VIII for budget, finance and research and technology.

He said the $105 million included for the payment of gas to Arco Indonesia Inc., a subsidiary of Atlantic Richfield Co. (ARCO) of the United States; payment for geothermal steam and power to the Indonesian subsidiaries of the U.S. Unocal Corp.; and the payment of combined cycle power to PT Sengkang Energy.

Arco supplies gas for PLN's power plants in East Java.

Unocal operates a 165-Megawatt geothermal power plant on the Salak mountain, West Java, and supplies geothermal steam to the 165-MW geothermal power plant owned by PLN's subsidiary, PT Pembangkitan Listrik Jawa Bali I (PJB), located in the same area.

Sengkang operates a 135-MW combined cycle power plant in South Sulawesi.

PLN has been severely battered by the monetary crisis which has gripped the country since the middle of last year because of the sharp depreciation of the rupiah against the U.S. dollar.

The company earns in rupiah while spending -- including the foreign debt payment and the power purchases from independent power producers -- are in dollars.

The company suffered a loss of more than Rp 550 trillion ($36.6 million) last year. It asked for a subsidy of Rp 1.25 trillion from the government early this year to help it meet its financial obligations to gas contractors and IPPs for the first quarter of the year.

Djiteng said during the hearing that PLN needed a government subsidy of Rp 2.3 trillion this fiscal year if the exchange rate averaged Rp 6,000 per dollar and the subsidy would increase to Rp 3.4 trillion if the rupiah's value fell to an average Rp 10,000 per dollar.

The government raised power prices by an average 20 percent in May and planned to further increase the price by 18 percent in August and another 20 percent in November to ease PLN's financial burdens.

But the government backtracked on increasing power prices for households due to an outcry from the public.

PLN has also tried to renegotiate with IPPs and gas contractors on their contracts but to no avail.

PLN's finance director Muslim Abuhujus said yesterday a negotiating team comprising officials from PLN, state oil and gas company Pertamina and the Ministry of Mines and Energy had reached an "agreement" with Arco on gas payment.

Abuhujus said PLN would pay Arco at the exchange rate of Rp 2,450 to the dollar for three months through June and then at the government rate of Rp 6,000 for three years starting July.

PLN is allowed to pay half of its financial obligations for three years but it has to repay the arrears with some interest in the future.

But Abuhujus said the agreement had yet to be signed because PLN could not secure a standby letter of credit at banks to guarantee its future debt repayment. (jsk)