PLN extends talks on power rate dispute

PLN extends talks on power rate dispute

JAKARTA (JP): State electricity company PT PLN agreed on
Thursday to extend power rate negotiations with industrial users
until December, when a decision would be made by the government
either to accept or dismiss their requests for downward revisions
of new power rates.

"We will maintain the status quo of the current situation;
but, if by the end of this year the government turns down their
suggestions, we will stick to the new power rates," PLN president
Kuntoro Mangkusubroto told reporters after a hearing with the
House of Representatives' Commission V, which oversees industrial
affairs.

The hearing was also attended by leaders of the Association of
Indonesian Textile Industries (API), the Association of
Indonesian Synthetic Fiber Producers (APSyFI), the Association of
Indonesian Apparel Manufacturers (AMI) and the Association of
Billets, Iron and Concrete Factories (ABBESI).

They have been protesting against a government decision in
April to increase power rates by 53 percent to 76 percent for
industrial users.

The associations have suggested a gradual increase of
20 percent this year up to 101 percent by September, 2002.

Kuntoro has advised them to forward their complaints and
suggestions to the government, as PLN has no authority to reverse
a government decision.

"If the government doesn't respond to the suggestions, we will
apply the 2000 power rates," he said.

He added that should the government approve a gradual
increase, PLN would reimburse the companies that have paid their
power bills under the current schedule.

During the hearing, it was agreed that PLN would not
disconnect the power for industrial users that were still in
negotiations.

However, Kuntoro warned that firms refusing to negotiate or
pay their bills, risked disconnection.

"We will disconnect them, and we can do it next week," he
said.

He further dismissed the associations' claims that they
represented the nation's industries.

According to him, since April, overdue payments owed by PLN's
customers nationwide have cumulatively reached Rp 600 billion
(US$68 million), of which Rp 400 billion is owed by only 29
firms.

"While 1.1 million people still can't enjoy electricity, they
(the 29 firms) don't pay their bills. How are we supposed to fund
our expansion?" Kuntoro said

Data from PLN showed that the 29 firms were largely members of
associations attending the House hearing. They included, among
others, PT Texmaco Jaya, PT Texmaco Taman, PT GT Petrochem, PT
Indorama Technology, PT Master Steel and PT Konikotex.

"It's up to you (House members) to judge whether those
complaining over the tariffs can be considered representatives of
industrial associations or whether they are just fighting for
individual company interests," Kuntoro said.

But API vice chairman Lili Asdjudiredja denied Kuntoro's
observation, claiming that almost all members of his association
refused to pay their electricity bills according to the new
tariffs.

"We still pay our bills, but under the old power rates," he
explained.

He said the government should adopt a gradual price increase,
since many companies were facing simultaneous increases in other
cost components.

Lili cited the 20 percent increase in the regional minimum
wage in April and another 24 percent in September, and the
average 12 percent increase in fuel prices from early this month.

Lili predicted that the sudden jump in production costs would
force the textile industry to scale back its export target this
year by around 10 percent from an initial target of US$7.8
billion.

Separately, news agency Antara quoted Minister of Energy and
Mineral Resources Purnomo Yusgiantoro as saying on Thursday that
PLN had requested the government to bail out its $1.33 billion
debt.

He said the government had received PLN's application for the
bailout on its debts to independent power producers (IPPs).

"The government will discuss PLN's request with the team
assigned through Presidential Decree No 133 to restructure PLN's
financial structure," he said, before attending a limited Cabinet
meeting chaired by Vice President Megawati Soekarnoputri.

Over the years, PLN has failed to pay for the electricity it
has purchased from the IPPs.

In the first half of this year, PLN recorded net revenues of
Rp 10.11 trillion, up 30 percent from the same period last year,
mainly due to the new power rates.

However, during the same period, the state company recorded a
twelve-fold increase in losses to Rp 11.58 trillion, as
against last year's first semester loss of Rp 974 billion. (bkm)