PLN relying on govt support to ride out crisis

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)