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)