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. (02)