PLN urged to sell assets to improve financial soundness
PLN urged to sell assets to improve financial soundness
JAKARTA (JP): The government has suggested that the State
Electricity Company (PLN) sell its 800-megawatt coal-fired power
station at Paiton, East Java to improve its financial soundness.
"Yes, selling the assets in Paiton is one of the options being
mulled over to cope with PLN's liquidity problems," said Zuhal,
the director general for electricity, over the weekend.
Zuhal, who is also the chief supervisor (commissioner) of PLN,
confirmed to reporters that the state company had liquidity
problems and was in bad need of fresh funds to improve its
financial soundness.
"There are three alternatives for PLN to get out of its
liquidity problems. Selling the Paiton power station, or selling
shares to the public, is one of them," Zuhal said.
The two other alternatives are acquiring additional equity
funds from the government and raising electricity tariffs.
He, however, ruled out the possibility of acquiring new equity
funds from the government, which is dealing with a severely
limited budget itself.
Zuhal also viewed an initial public offering of PLN's share as
feasible, in view of its poor financial performance and the long
process of obtaining a public listing permit.
"Therefore, selling assets is the best alternative," he said,
according to Antara.
Zuhal blamed PLN's liquidity problems on the low rate of
return on its investments, or less than 6 percent, and on the
aggressive capacity expansion made over the last two years.
"PLN has made a profit of only around Rp 1 trillion (US$427
million) a year, but has invested more than Rp 8 trillion every
year," Zuhal noted.
He did not, however, give further details because the planned
asset liquidation was still being considered.
PLN's power station at Paiton has two units, each with an
installed capacity of 400 MW. It is the first power generation
plant to operate in the area, which is being developed into a
huge electricity center.
Paiton Energy Co. is building two power units at Paiton with a
combined capacity of 1,230 MW, with an estimated investment of
$2.5 billion.
Paiton Energy is jointly owned by PT Batu Hitam Perkasa of
Indonesia (controlled by Hashim Djojohadikusumo), General
Electric and Mission Energy of the United States and Mitsui Co.
Ltd. of Japan.
Another consortium, which includes the Bimantara group, is
also developing a complex of coal-fired power stations at Paiton,
with a total capacity of 2,400 MW and with an investment
estimated to reach $2.5 billion.
The power plant project is owned by PT Jawa Power, which is
jointly owned by Siemens AG of Germany and PowerGen of Britain.
Tadjoedin Noer Said of the House Budgetary Commission
supported the plan to sell PLN's power station at Paiton, but he
suggested that the sales be conducted through a competitive,
transparent bidding process. (vin)