PLN committed to improving its efficiency

PLN committed to improving its efficiency

JAKARTA (JP): The state-owned electricity company PT PLN
yesterday vowed to improve its efficiency so as to save funds for
the acceleration of programs for the electrification of a
majority of the country's households.

"The main programs for the efficiency improvement are to
reduce PLN's dependence on oil for power generation, diminish
subsidies for certain consumers and curb electricity losses,"
PLN's president, Zuhal, told economic analysts in a dialog on
electricity tariffs yesterday.

Yesterday's dialog, which was organized by the Ministry of
Mines and Energy, featured the country's prominent economic
analysts, including director of the Advisory Group in Economics,
Industry and Trade Rizal Ramli, an executive of the Center for
Strategic and International Studies, Pande Radja Silalahi,
executives of the Indonesian Chamber of Commerce and Industry
Aryono Abdulkadir and Nur Wijoyo, chairman of the Indonesian
Consumer Protection Agency Zumrotin K. Susilo and a member of the
Budgetary Commission of the House of Representatives, Sri Bintang
Pamungkas, who criticized the government's decision to raise
electricity tariffs as from this month.

During a four-hour discussion, the analysts concurred that PLN
should realign its management so as to improve its efficiency and
accelerate its electrification programs.

Zuhal assured the critics that PLN is in the position to
reduce its dependence on oil for electricity generation to 40
percent from around 60 percent at present.

PLN's spending for oil in the 1992/1993 fiscal year, for
example, reached Rp 1.13 trillion (US$516.9 million) of its total
operation spending of Rp 3.99 trillion, as compared to around Rp
1.82 trillion against the total operation spending of Rp 3.29
trillion in the previous year.

He added that in reducing the dependence on oil, PLN will
establish more coal-fired and hydropower plants in the future.

Subsidies

Zuhal said PLN also plans to abandon subsidies for its
subscribers in the coming five years.

According to Zuhal, out of the current 15 million subscribers,
11 million enjoy subsidies from PLN.

He added that subscribers enjoying subsidies are, among
others, small and medium-size industrial firms and households.

He said that PLN is also committed to curbing its electricity
losses to around 10 percent from around 12.5 percent at present.

He said the losses are caused by the downgrading of
facilities, thieveries and miscalculation of electricity usage.

Zuhal promised that the efficiency improvement will support
its electrification program for over 62,000 villages throughout
the country during the next ten years.

"We promise that the increase in rates by 7.68 percent as from
November and the regular tariff adjustment every three months
will be used to provide electrification for 60 percent of our
population," he added.

Only 40 percent of the country's population enjoy electricity
at present.

Sri Bintang suggested that PLN impose special rates for
eastern provinces, considering that incomes there are limited.

Zuhal responded that imposing a special rate scheme is
difficult because investments of the plants in rural areas and
their production costs are relatively expensive because its rate
of return is slow in those areas.

"Even most villagers throughout the country have their
electricity subsidized," he added. (fhp)