PLN expected to lose at least $421m next year

JAKARTA (JP): State-owned electricity company PT PLN projected yesterday that it could lose at least Rp 1.5 trillion (US$421.3 million) next year due to the rupiah's depreciation against the U.S. dollar.

PLN president Djiteng Marsudi said on the sideline of the national electricity day celebration at PLN's headquarters that the company was burdened by the depreciation as it had to pay most of its debt in U.S. dollars, while earnings were in rupiah.

Besides, Djiteng said, PLN would have to bear additional costs with a possible increase in gas and diesel fuel prices, which PLN had to pay in dollars as well.

"Actual losses could be higher than Rp 1.5 trillion, since it was calculated using a rate of Rp 3,000 to the dollar," Djiteng said.

The rupiah has lost 32 percent of its value, at Rp 3,550 to the dollar yesterday from Rp 2,431 on July 1, amid a monetary crisis besetting the Southeast Asian region.

Djiteng did not specify the total amount of PLN's foreign debt, but Minister of Mines and Energy I.B. Sudjana said during the ceremony that foreign loans made up most of PLN's total loans.

Sudjana's written report submitted to the House of Representatives last January said PLN's borrowing from local and foreign financiers reached Rp 17.48 trillion in fiscal year 1995/1996.

Sudjana further said in last month's hearing that PLN had planned to borrow another Rp 6.4 trillion this calender year, Rp 1.8 trillion of which had been disbursed in the first seven months.

Sudjana said in January that PLN had earned Rp 325.4 billion in 1995/1996, and the company was projected to earn Rp 849.4 billion in 1996/1997.

Efficiency

Sudjana said yesterday that measures to be taken by the government to help PLN solve its financial problems included helping it access more customers.

He said the government would limit the development of captive power by industrial estate developers to provide PLN a chance to penetrate the industrial sector.

"The development of captive power should be limited because it isn't efficient. Also by using diesel as an energy source, they enjoy most of the government fuel subsidies," Sudjana said.

However, Sudjana said PLN had to improve its efficiency and service to attract manufacturing companies in industrial estates.

PLN data shows there are 9,000 megawatts (MW) of captive power plants in Indonesia, mostly owned by industrial and commercial enterprises, compared with PLN's power capacity of 15,940 MW.

Djiteng said as part of the company's efficiency program, PLN would prefer revamping its outdated machinery over scrapping it for newer technology.

In case the company had to buy new machinery and equipment, the company would prioritize those made by local manufacturers over imported ones, he added. (jsk)