PLN suffers from mismanagement, says Djiteng

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)