PLN comes up short on orders for new projects

JAKARTA (JP): Hundreds of thousands of applications for electricity connections nationwide have been shelved indefinitely because state electricity company PLN lacks funds for the installations, the company said Tuesday.

Operational director Tunggono and financial director Parno Isworo said the pending applications included 45,000 in Lampung, 20,000 in Jambi and 50,000 in Java.

PLN could not fulfill the requests because it lacked funds to buy the equipment for network expansion and new connections -- including concrete poles, cables, power meters and mini-circuit breakers -- whose prices had sharply risen following the rupiah's fall against the dollar since mid-last year.

"Many of the materials for the local production of the equipment have to be imported," Tunggono explained.

The government has allocated huge subsidies to the company but the money was insufficient to cover its operating deficit, they said.

"The government should provide us bigger subsidies to finance the expansion of our distribution network," Parno said.

He added that he did not know when the government would give additional subsidies.

PLN had 24.6 million subscribers as of 1997.

Analysts have said PLN's inability to meet applications for new connections was ironic because the company was experiencing a power surplus of between 3,000 Megawatt (MW) and 4,000 MW.

But they argued that an increase in the number of subscribers at present would not help PLN's financial performance because it sells its power at only about 2 U.S cents per kilowatt hour (kwh), compared with its production cost of 6 U.S cents per kwh.

PLN's president Adhi Satriya confirmed on Tuesday the company had suffered a net loss of Rp 14.99 trillion (US$1.3 billion) for the first half of this year, compared to a net profit of Rp 720 billion in the same period of 1997.

The loss will be covered with government subsidies, he said.

He said the 1998 half-yearly financial results were based on a rupiah exchange rate of Rp 14,975 to the dollar, while the 1997 results were based on the rate of Rp 2,474.

Adhi added that the company suffered a foreign exchange loss of Rp 12.84 trillion, much higher than the Rp 85.56 billion loss reported in the first half of 1997.

The monetary crisis has severely affected PLN because it receives its earnings in rupiah but pays most of its operating costs in U.S. dollars. Its costs include the purchase of fuel, power supplied by Independent Power Producers (IPPs) and spare parts for its transmission network and generating plants. (jsk)