PLN suffers from mismanagement, says Djiteng

JAKARTA (JP): The president of the state-owned electricity company PLN, Djiteng Marsudi, admitted yesterday the company suffered from mismanagement.

But Djiteng said in a hearing with Commission V of the House of Representatives that the mismanagement occurred due to massive intervention from "outsiders".

At the hearing, most of the commission's members raised questions over the World Bank's letter dated Nov. 3 to the Ministry of Mines and Energy, the Ministry of Finance and the National Development Planning Board, which criticized PLN for mismanagement and a lack of transparency in its dealings with private power companies.

Djiteng said the letter was sent in connection with PLN's proposal to acquire a loan from the World Bank to finance the development of power plants for the less-developed eastern part of Indonesia in which private power companies were not interested.

Djiteng blamed the mismanagement and lack of transparency in dealing with private power companies on the intervention from "outsiders".

"I realize the risks from speaking up about this now. But, I have to say this openly for the sake of our country," Djiteng said.

Djiteng did not specify the so-called "outsiders", but he noted that their intervention had caused a monopoly by a small number of people over the country's power projects.

Djiteng praised the government's deregulation to let the private sector enter into the power industry which he said was in line with the world's privatization trend in all sectors.

But, he said, such an economic deregulation should be coupled with a "political" deregulation to prevent political power from controlling the economic sector.

"I always speak up about this to the House and the press. From where else can we expect an effort to change the situation," Djiteng said.

PLN has signed power purchase agreements with 29 private companies, but the government canceled several projects in a retrenchment measure to cope with the current economic crisis.

The 29 private power projects have been mostly awarded without tenders to a small number of Indonesian conglomerates, foundations and politicians in consortia with foreign giant power companies.

According to the legislators, the World Bank's letter named two private projects -- the coal-fired Tanjung Jati B and Tanjung Jati C in Central Java -- as projects which were granted without tenders.

Tanjung Jati B and C, each with the capacity of 1,320 megawatts, had been granted without a tender to the Consolidated Electric Power Asia (CEPA) Indonesia, which is owned by Hong Kong's businessman Gordon Wu and a PLN contractor Djan Faridz.

Sources said they are supported by a powerful Indonesian businessperson who has also several other power projects in the country.

CEPA was given both projects in return for its willingness to reduce the price of the power it will sell to PLN from 6.4 U.S. cents to 5.73 cents.

Legislator Joeslin Nasution of the Golkar faction said he was also concerned with the control of the country's power projects by a small number of people and he encouraged Djiteng to openly disclose the situation to the government for a solution.

"The time is right for PLN to ask for changes since the government currently is looking for changes as it has shown by liquidating banks owned by 'those' people," Nasution carefully said.

"I hope we all understand what I mean by 'those people'," he said.

The government recently liquidated 16 banks for mismanagement, including those controlled by Bambang Trihatmodjo, President Soeharto's son, and Probosutedjo, Soeharto's half-brother.

Regarding the loan from the World Bank, Djiteng said the government was still negotiating with the World Bank on the terms of the loan. (jsk)