PLN 'mistakes' ring up record loss of Rp 14.7t

PLN 'mistakes' ring up record loss of Rp 14.7t

JAKARTA (JP): State electricity company PT PLN is set for a
record loss of Rp 14.7 trillion (US$1.05 billion) this year due
to mistakes made by its current board of directors, State
Minister for the Empowerment of State Enterprises Tanri Abeng
said yesterday.

He believed the loss, which promised to be higher in the next
couple of years if corrective measures were not taken forthwith,
was primarily caused by the unexpectedly sharp depreciation of
the rupiah against the U.S. dollar.

The directors, Tanri added, shared the blame for not heading
off the firm's financial crisis.

"But in addition to that, the board of directors has failed in
anticipating the factors causing the loss, especially the many
contracts to purchase electricity power from private producers,"
Tanri told members of House of Representatives Commission V for
mines and energy.

"PLN is therefore on the brink of bankruptcy because of the
mistakes made by the board of directors."

Tanri said PLN's financial performance plummeted from a profit
of Rp 1.2 trillion in 1996 to losses of Rp 600 billion in 1997
and Rp 6.5 trillion in the first quarter of this year.

"Because PLN is now in a very critical condition, the board of
directors has to be replaced," he argued.

Legislators questioned the plan to replace outspoken PLN
president Djiteng Marsudi, who has served only three of the usual
five-year tenure.

Tanri explained that 24 of the 26 power purchasing contracts
with independent power producers were signed by the board of
directors during Djiteng's presidency.

The problem, he added, was that the power purchase contracts
had caused a huge oversupply of power throughout the country,
estimated to reach 5,000 MW.

The contracts -- mostly made with influential businesspeople,
including the children of former president Soeharto -- also
required PLN to purchase the power at U.S. dollar rates although
the company sells the power to consumers in rupiah. This had
proven a major factor in the losses.

"Although the board of directors argued that they were
politically 'forced' into signing the contracts, it is not
acceptable legally and professionally (as an excuse)," Tanri
said.

"If you're a professional, you won't do anything that you know
will cause a loss to the company you work for."

Rumors Djiteng would be replaced emerged last month after he
unilaterally canceled the power purchase contract with PT
Cikarang Listrindo which is owned by Sudwikatmono, Soeharto's
cousin.

Djiteng also threatened to follow suit with other independent
power producers. He gained full support from House members and
PLN employees, but his move was criticized by some high-ranking
officials.

The head of PLN's distribution office for the Jakarta and
Tanggerang areas, Tunggono, was strongly tipped to replace him.

Tanri planned to put Djiteng in charge of the committee
responsible for restructuring PLN due to his extensive knowledge
about conditions in the company and because he signed most of the
contracts with the independent power producers.

"Djiteng should have a moral obligation to turn around PLN
from its near bankruptcy situation. So this offer is an honorable
way for him to make up for his past mistakes."

Tanri also said that if the restructuring plan for PLN failed,
the company would have to obtain Rp 117 trillion in subsidies
over the next four years to survive.

Tanri gained political support for his objective to
restructure various state-owned companies yesterday. Coordinating
Minister for Development Supervision and State Administrative
Reforms Hartarto Sastrosoenarto stressed the state minister for
the empowerment of state enterprises was the only official
responsible for restructuring state companies.

Some had argued the finance minister should wield more power
than Tanri in the restructuring process.

Separately yesterday, director general for the State Budget
Darsyah said the government would pay subsidies to PLN on a
monthly basis under the current 1998/1999 State Budget, a change
from a yearly basis during the previous fiscal year.

He said the payment would be made after the company had been
audited by the government finance comptroller.

"We already paid (state oil company) Pertamina on a monthly
basis and we hope to pay PLN on the same basis as quickly as
possible," he told reporters on the sidelines of the House
plenary session to approve the amended 1998/1999 State Budget.

The budget allocates Rp 8 trillion in subsidies for PLN.

Tanri also told legislators yesterday that national flag
carrier Garuda Indonesia would book a net loss of Rp 2 trillion
this year in the wake of the year-old economic crisis.

He said newly appointed Garuda president Robby Djohan would
fly to London this week to renegotiate the airline's $500 million
in short-term foreign debt.

The country's airline industry has been badly hit by the
current economic turbulence. About 70 percent of its operating
costs are in the American dollar but its load factor has plunged
as people's purchasing power declined.

Tanri said Garuda would have to be restructured, including
reducing the number of its aircraft, to overcome its problems.
(rei)