PLN losses drop by 40 percent in first half

JAKARTA (JP): State-owned electricity company PT PLN said on Friday that its net losses had dropped by close to 40 percent to Rp 6.98 trillion (about US$782 million) in the first half of the year from Rp 11.58 trillion in the corresponding period last year.

In an advertisement published in several local newspapers, the financially troubled state firm said its revenue rose to Rp 12.51 trillion in the first six months, from Rp 10.2 trillion in the same period a year ago, while operating costs increased to Rp 14.55 trillion from Rp 12.3 trillion.

This caused a decrease in operating losses to Rp 2.03 trillion from Rp 2.19 trillion, the company said.

It further said its debt payment significantly dropped to Rp 1.6 trillion in the first half of the year, from 5.94 trillion in the first half of last year, while its foreign exchange losses slightly decreased to Rp 3.3 trillion from Rp 3.53 trillion during the same period last year.

PLN is one of the state enterprises to have been heavily affected by the economic crisis, which hit the country starting in the middle of 1997.

The sharp downfall of the rupiah had caused deep financial troubles to the company because it pays most of its costs, including the purchase of power from independent power producers (IPP) in dollars while it sells its power in rupiah.

The company is now seeking to renegotiate its power purchase contracts with the IPPs to ease its financial burdens.

The government has tried to help save it from bankruptcy by allowing it to raise its power rates and convert its loans to the firm into equity.

The company has been allowed to raise its power rates by 17.47 percent in the second half of the year, which will be carried out in two phases. The first phase of the price increase was made on July 1 and the second-phase increase is due in October.

PLN's president Eddie Widiono said the price increase would enable the state company to raise an additional Rp 2.3 trillion in the second half of the year. Still, despite the additional revenue, the state company is projected to suffer Rp 4.5 trillion in losses this year.

To ease the company's financial burdens, the previous government under then president Abdurrahman Wahid agreed in June to convert Rp 28.78 trillion of Rp 34.07 trillion in PLN's total debt into the government's equity.

The remaining Rp 5.28 trillion will be treated as a new 20- year loan to the state company with a two-year grace period with an additional administrative cost of four percent per year. (jsk)