PLN relying on govt support to ride out crisis

JAKARTA (JP): State electricity company PT PLN said on Tuesday it was banking on the government's support to ensure it survived the country's worst-ever economic crisis.

PLN president Adhi Satriya said the government had taken over responsibility for restructuring most of the company's foreign debts.

It has also been granted leeway to postpone the payment of its due debts to the government, Adhi said.

"If the government agrees with the postponement of PLN debt servicing, it means that PLN cannot be declared bankrupt," he told journalists after a ceremony marking the 53rd National Electricity Day.

Adhi acknowledged PLN would fail without the government's assistance because it could not meet most of its obligations.

According to its 1997 financial reports, the company had outstanding long-term foreign debts of Rp 12.4 trillion (US$1.6 billion at the current exchange rate), short-term (less than one year) foreign debts of Rp 1.2 trillion, bonds worth Rp 3.2 trillion, debts to local banks of Rp 100 billion and debts to the government amounting to Rp 330.1 billion.

"This economic crisis has caused payment of PLN obligations to the government to be postponed, while debts to foreign creditors were negotiated by the government with the creditors," he was quoted by Antara news agency as saying.

PLN is experiencing severe financial problems due to the rupiah's fall against the American dollar since the middle of last year. It receives revenues in rupiah but pays most of its operational costs, including the purchase of power from independent power producers (IPPs), in dollars.

PLN suffered a net loss of almost Rp 14.99 trillion in the first half of the year, compared to a net profit of Rp 720 billion in the same period last year.

Most of PLN's losses resulted from foreign exchange losses, totaling Rp 12.84 trillion.

Because of PLN's financial burden and falling electricity demand, Adhi said on Monday that PLN would not buy electricity from independent IPPs coming on stream in 1999.

Adhi said consumption on the grid in Java and Bali had declined due to widespread closure of factories in the crisis.

"Because of that, we are not going to buy from independent power producers which begin operations in 1999."

He said PLN would not need additional electricity supplies until 2002, especially for the Java-Bali grid.

He also said the crisis and the subsequent fall in demand for power had made it difficult for PLN to fulfill the terms of its contracts with the private sector.

"But, fortunately, those IPPs are very understanding of the worsening situation of PLN," he was quoted as saying.

Satriya said IPPs were willing to renegotiate their contracts with PLN.

IPPs due to come on stream in 1999 include Paiton I and Paiton II giants in East Java.

The 1,230 megawatt (MW) coal-fired Paiton I power plant is owned by a consortium consisting of America's Mission Energy and General Electric, Japan's Mitsui Co and Indonesia's Batu Hitam Perkasa, which is controlled by Hashim Djojohadikusumo.

The 1,220 MW coal-fired Paiton II power plant is owned by a consortium consisting of Siemens of Germany, Power Gen Plc of Britain and PT Bumipertiwi Tatapradipta, which is controlled by former president Soeharto's second son Bambang Trihatmodjo.

PLN has signed power agreements with 26 IPPs, many owned by foreign multinationals in partnership with the family or friends of Soeharto, forced to step down in May amid nationwide unrest and riots in Jakarta that killed 1,200 people.

PLN argues it was forced into many of the contracts on unfavorable terms which it cannot honor in the crisis. (jsk/rid)