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.