PLN allowed to be profit-oriented

JAKARTA (JP): The government, under a presidential decree, has approved the State Electricity Company's (PLN) request to change its status from a limited company to one with an orientation of making profits.

The move is expected to set the stage for PLN selling part of its equity to the public.

The company's president, Zuhal, said here yesterday that the government's approval is stated in Presidential Decree No. 23/1994, dated June 16.

"We expect that all the documents related to the new status will be signed by a public notary before the end of this month," Zuhal told reporters after signing agreements with two state universities on academic cooperation.

PLN has thus far been operating as a state-owned public company which focuses its operations on public service. The World Bank has repeatedly suggested that PLN take measures so they could set electricity billing rates at levels that would enable them to reduce dependence on government spending.

Zuhal said the new status will allow PLN to set the stage for going public in the near future.

"But, our main priority now is to set up two new subsidiaries which will be responsible for the generation and distribution of power in East and West Java beginning next January," he added.

Zuhal said recently that PLN will sell part of the shares of the two subsidiaries to the public through the capital market.

The two subsidiaries will be part of PLN's planned 11 working units, which will operate as profit centers, he said.

"If the units are able to maintain their good performance in the future, they will be allowed to become PLN's new subsidiaries," he pointed out.

Working units in North and South Sumatra and South Sulawesi have the potential to become new subsidiaries, he said.

In the agreements signed yesterday, PLN, the Gajah Mada University of Yogyakarta and the Hasanuddin University of Ujungpandang will cooperate in engineering research and electricity development.(fhp)