PLN falls short of target

PLN falls short of target

Leony Aurora, The Jakarta Post, Jakarta

Citing lack of funds, state utility company PLN will likely fail
this year to push losses stemming from the depreciation of
channeled power down to below 10 percent, an executive says.

The power loss stands at above 10 percent at present, as
against the 9.84 percent target, PLN's marketing and services
director Sunggu Anwar Aritonang said on Wednesday.

"The network's improvement, including the construction of a
number of electrical relay stations, hit a snag when the
(allocated) budget had to be reallocated to cover operational
(costs)," said Aritonang.

Some Rp 4.2 trillion (US$42 million) was initially earmarked
to lower the electricity loss, including network loss and power
thefts, from 11.47 percent at the beginning 2005 to the target.

"However, PLN could only spare Rp 1.6 trillion to strengthen
the system," said Aritonang.

PLN has seen its power generation costs rising since March,
when the government raised domestic fuel prices by 29 percent.
The government later decided that the firm must pay market prices
for some three million kiloliters of over-quota petroleum-based
fuel this year and hiked fuel prices by another 126.6 percent on
average in October, prompting even higher transportation costs.

For next year, PLN has set the goal to push the loss to 9.74
percent, slightly lower than this year's target, said Aritonang,
declining to mention the amount of investment needed to attain
the target.

PLN suffered a net loss in 2004 of Rp 2.02 trillion, lower
than Rp 5.09 trillion booked the previous year. The company,
however, was able that year to book a operational profit of Rp
2.56 trillion, the first time the operation went into the black
since the 1997 monetary crisis.

PLN's president director Eddie Widiono said on Sept. 22 that
in the current conditions it would be impossible for the company
to avoid an operational loss.

PLN's director of primary power generation Ali Herman Ibrahim
said on Oct. 2 that due to the new policy on fuel used by
industries, as well as more expensive coal, the firm's fuel costs
next year would jump by 50 percent to Rp 45 trillion from Rp 30
trillion spent throughout this year.

PLN uses the more expensive petroleum fuel to fire up power
plants if electricity produced by utilizing hydropower,
geothermal, gas, and coal proves to be insufficient. It usually
turns to oil-based fuels to fire its plants as power demand jumps
during the peak hours between 5 p.m. and 10 p.m.

Although plants fired by oil-based fuel contribute only around
30 percent of the country's total power capacity, it makes up
close to 70 percent of the nation's total power-generation costs.