PT PLN 2000 net loss surges to Rp 24 trillion

JAKARTA (JP): State-owned electricity company PT PLN said on Monday its net loss last year surged to Rp 24.61 trillion (about US$2.16 billion), or more than double the Rp 11.36 trillion loss recorded in the previous year, due mainly to the higher cost of purchasing electricity from independent power producers (IPPs).

PLN said that payments to IPPs had soared to Rp 9.39 trillion from Rp 5.06 trillion the year before.

"It's partly because some IPPs began to produce power last year which we purchased to meet demand," said PLN finance director Parno Isworo during a public presentation by the company.

PLN purchases the IPPs' power at U.S dollar rates, but sells its power to the public in rupiah. The more power PLN buys from the IPPs, the greater the price gap that it must cover.

Among the IPPs that came on stream last year were the coal- fired Paiton I power plant. Now, PLN and Paiton operator PT Paiton Energy Company are in negotiations over lowering the power rates the latter charges to PLN.

PLN suffered a net loss despite a marked increase in its revenue, up to Rp 22.13 trillion from Rp 15.67 trillion the year before, as PLN connected some 241,000 new customers.

But debt repayments of Rp 13.65 trillion, compared to Rp 9.42 trillion a year earlier, worsened PLN's net loss.

Last year, the company also recorded a hefty foreign exchange loss of Rp 5.49 trillion, as against a foreign exchange gain of Rp 3.45 trillion during the previous year.

PLN's poor performance further affects the prospects of luring foreign investors into the power sector to help meet rising demand.

Indonesia is in dire need of more generating capacity to stave off a possible shortage of power by late 2002 or 2003, according to experts.

Given the sluggish local banking sector and the government's financial woes, the country will have to rely on foreign investors to build the new power plants.

During the early 1990s, Indonesia invited foreign investors to help build power plants across the country in anticipation of an expected power deficit.

Responding to the call, some 27 IPPs signed contracts with PLN to build power plants and to sell their power at dollar- denominated rates.

However, the 1997 economic crisis led to a sudden drop in power demand and a sharp depreciation of the rupiah. This combination crippled PLN's ability to pay for the power it buys as it sells on the power to the public in rupiah.

To prevent PLN from going bankrupt, the government allowed the state company to renegotiate all of its 27 contracts with the IPPs.

This move, however, wrecked legal havoc with the IPPs' contracts, thereby hurting Indonesia's relations with the international creditors who financed the projects.

Foreign investors have demanded that Indonesia restructure its power sector, including improving PLN's financial health to enable it buy their power in dollars.

According to PLN's work plan, the company expects to cut its net loss to Rp 4.4 trillion from last year's Rp 24.61 trillion.

"I'm sure we'll be able to cut our net loss, as we've been quite successful in renegotiating the power rates with the IPPs," Parno explained.

Under the work plan, the cost of purchasing the IPPs' power is seen lower at Rp 6.24 trillion as against last year's Rp 9.39 trillion.

His optimism comes despite a first quarter net loss of Rp 3.4 trillion this year already.

Recently, PLN also secured a debt restructuring deal worth Rp 21 trillion in respect of the debts it owes to the government. Under the deal, the state company will only repay loan principle of Rp 5.2 trillion over 20 years.

The remainder of the debt will be converted into government equity in PLN. (bkm)