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)