PLN jolted by big losses in 1998

PLN jolted by big losses in 1998

JAKARTA (JP): State-owned electricity company PT PLN saw its
losses jump 15 fold in the year ending Dec. 31, 1998, mainly as a
result of the increased cost of procuring electricity from
private contractors and soaring debt servicing costs.

PLN president Adhi Satrya told a hearing with House Commission
V for industry, mining and trade on Tuesday night that PLN lost
Rp 9.16 trillion (US$1.4 billion) in 1998, up from Rp 579 billion
a year earlier. The data was provided in an audited report by the
public accounting office of Hans Tuanakota & Mustofa.

The loss was incurred despite a 26.15 percent increase in
operating revenues to Rp 14 trillion and a Rp 1.93 government
subsidy.

The fall was attributed largely to the plunging of the
rupiah's exchange rate during the year.

PLN has a contractual obligation to purchase electricity from
Independent Power Producers (IPP) in U.S. dollars, while its
sales were in rupiah. The company paid Rp 1.89 trillion to the
suppliers in 1998, up from Rp 325 billion.

PLN paid Rp 6.01 trillion in debt services, a 183 percent
increase over the previous year of Rp 2.26 trillion.

PLN's finances are currently being audited by internationally-
renowned public accountants Arthur Anderson as part of the
International Monetary Fund (IMF) program to improve the
efficiency of state companies.

Adhi said PLN was implementing four strategies for its
survival and restore its financial condition: giving priority to
quick-yielding projects, corporate restructuring, financial
restructuring and renegotiating the terms of contracts with IPP.
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