PLN projects loss of Rp 6t this year

JAKARTA (JP): State electricity company PLN may suffer a loss of at least Rp 6 trillion (US$800 million) this year due to the rupiah's sharp depreciation against the American dollar.

"The Rp 6 trillion loss estimate is based on an average exchange rate of Rp 6,000 per dollar. If the average exchange rate is lower, the potential losses will be much bigger," company director Djiteng Marsudi told reporters Monday.

The company, which recorded a net profit of Rp 1.18 trillion in 1996, suffered a loss of Rp 579 billion last year when the crisis started to bite into its revenues.

Djiteng said this year's projected loss would be attributed to a swell in spending to meet loan installments, and payments for gas, power from private-sector generators and spare parts.

He said that these spendings, which were mostly transacted in dollars, might continue to increase in terms of rupiah.

The fall in the rupiah against the U.S. dollar by about 70 percent, since the monetary crisis first hit the country in early August, has plunged the company into financial distress as most of its obligations are in dollars. Its earnings are all based in rupiah.

Djiteng, however, did not give any figures on the company's debt which would mature this year and its spendings for gas, power and spare parts.

PLN's net assets increased to Rp 60.5 trillion in 1997, from Rp 52.5 trillion in 1996.

He said the company actually booked an operating profit of about Rp 1.67 trillion last year but the significant increase in dollar-based obligations to Rp 2.25 trillion had eaten up most of the profit, leaving the company with a net loss of Rp 579 billion.

Djiteng acknowledged that an increase in the electricity tariff would not be able to compensate for the company's huge financial deficit.

"But the increase is still needed, at least to reduce the operating deficit," he said. "It is therefore important that the government provides subsidy to help overcome its financial problem. Otherwise PLN will go under."

The continued fall in the rupiah has forced PLN to pay only part of its bills for gas and power from gas producers and the Independent Power Producers (IPPs). The company has been paying its gas and power contracts based on the pre-crisis exchange rate of Rp 2,450 per dollar rather than at current rates, which have fluctuated between 15,000 and 7,000 since January.

PLN currently buys gas from the state oil and gas company Pertamina's production sharing contractors -- ARII, a subsidiary of Atlantic Richfield Co. of the United States; Kodeco of South Korea; and Exspan of the Medco Group -- at prices of between $2.45 and $3 per million British thermal units (MMBTU).

PLN has signed power purchase agreements with 26 IPPs but only two of them have come on stream: PT Energy Sengkang which operates a 135-Megawatt combined cycle power plant in South Sulawesi and PT Dayabumi Salak Pratama which operates a 165-MW geothermal power plant in West Java.

PLN currently sells power at an average of Rp 180 per kwh to the public while it buys at an average of 6.4 U.S cents per kwh from independent or private powr producers.

The government tried to help PLN with a total subsidy of Rp 1.25 trillion but the money was only enough to cover the company's debts with gas and power contractors for the first quarter of the year.

The government has said it would not continue the subsidies to PLN. It instead asked the company to renegotiate its buying prices with the power and gas contractors. (jsk)