PLN to seek massive loans for expansion

PLN to seek massive loans for expansion

Moch. N. Kurniawan, The Jakarta Post, Jakarta

The state-owned electricity company PLN said on Tuesday it was
planning to seek foreign loans of between Rp 99 trillion (US$9.5
billion) and Rp 141 trillion until 2005 to finance expansion
programs aimed at meeting growing power demands in the country.

PLN president Eddie Widiono said that PLN would use the loans
to finance the development of at least 47 power generating units
and 14 transmission lines across the country.

"The funds will be enough for us to maintain our power supply
to meet future growing demand," he told a press conference
following a meeting with senior economic ministers.

He added PLN had made loan proposals to several foreign
financial institutions including from Japan, Denmark, Belgium and
Germany.

He didn't provide the names of the institutions.

According to him, the country's power demand would grow by an
average of at least 3.4 percent per year until 2005.

But he said the power demand might grow by 3.8 percent for
Java and Bali, and 4.4 percent for other areas, should the
country's economy grow better than expected.

"In this case, we need Rp 141 trillion to meet the demand," he
added.

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

It also said that Java and Bali would experience power
shortages in 2004 due to the lack of generating capacity and
rising demand.

At present, PLN's generating capacity stands at 18,600
megawatts (MW), while demand at the current peak reaches 17,000
MW.

It added the state utility did not have the financial ability
to build new generating units to match the country's future power
demands.

Elsewhere, Eddie said that PLN's net loss declined to Rp 1.8
trillion in 2001 from Rp 24.6 trillion in 2000.

He said the government's decision to write off Rp 20.8
trillion of PLN's debt helped improve the company's bottom line.

In addition, an average 17.47 percent increase in electricity
prices last year, and successful deals in reducing power rates
with several independent power producers had also helped PLN
minimize its losses, he said.

PLN expected its loss to further drop to Rp 200 billion this
year, he added.

The rupiah's sharp fall against the dollar following the 1997
Asian currency crisis had badly affected PLN's bottom line. This
is because it sells electricity in rupiah, but most of its
operating costs are in U.S. dollars.