PLN seeks foreign loans

Moch. N. Kurniawan, The Jakarta Post, Jakarta

The state-owned electricity company PLN is seeking foreign loans to finance power generation projects in a bid to avoid looming power shortages in Java and Bali in 2004.

PLN president Eddie Widiono said on Monday that borrowing was inevitable as the company did not have sufficient internal funds to finance the projects.

"We have to seek foreign funds ... no other choice," he told reporters on the sidelines of a seminar on the future of the country's power industry.

PLN has said that Java and Bali will experience power shortages in 2004 due to the lack of generating capacity and rising demand.

PLN estimates that the company's generating capacity will only grow by about 5 percent per year from 18,600 Megawatts (MW) at present, while demand will increase by between 7 percent and 11 percent from the current peak of 17,000 MW.

Since the 1997 economic crisis, PLN's financial health has deteriorated rapidly year by year, making it almost impossible to implement expansion programs.

Eddie said that should PLN receive the loans, the company would channel them into the expansion of its Muara Karang and Muara Tawar generating units in North Jakarta, and the Perak- Grati generating unit in Surabaya, East Java.

"We hope these generating units will be able to produce 3,000 MW of power before 2004," he said.

By the end of this year, PLN hopes to have started the building of a new Muara Karang generating unit with a capacity of 700 MW, which will require US$300 million in funds, he said.

The other projects would follow later, he added.

For regions outside Java and Bali, he said, the company would rely on the government funding to build more generating units.

PLN had earlier said that 24 critical systems outside the Java-Bali grid in 2002 would experience power shortages because of insufficient funds.