PLN losses drop by 40 percent in first half

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)