PT PLN to lose $287m despite rate increase

JAKARTA (JP): State electricity company PLN projects a loss of Rp 2.3 trillion (US$287 million) this year despite the huge increase in electricity tariffs, the company said yesterday.

Company president Djiteng Marsudi said the new government-set rate was projected to increase PLN's revenues to Rp 20.8 trillion this year, from Rp 11.13 trillion last year.

But these could only cover 90.13 percent of the company's production costs, he added.

"We would still suffer a loss of about Rp 2.3 trillion this year at the exchange rate of Rp 6,000 per U.S. dollar," Djiteng told a press conference.

The company had earlier projected a loss of Rp 11.37 trillion this year contingent on no increase in the tariff.

On Monday, the government increased fuel and electricity prices to reduce mounting subsidies.

The electricity price was increased by an average of 20 percent, to Rp 233.59 from Rp 194.74 per kilowatt hour (kwh), starting this month. The government will raise the tariff again by 20 percent in August and another 20 percent in November.

The power tariff will average Rp 280.43 per kwh in August and Rp 336.52 per kwh in November.

After November, PLN will further raise power tariff on a periodic basis every three months, but the increase "will be moderate", Djiteng said.

The government is allowing low-income households to apply for a special rate similar to that applied for non-profit organizations.

Djiteng said the new rates applied a cross-subsidy scheme in which the tariff applied to the poor was raised less than 20 percent, while the tariff for affluent households was raised more than 20 percent.

Cost

Djiteng promised to further improve PLN's efficiency to reduce unnecessary costs.

He conceded that the company was in financial difficulty following the rupiah's sharp depreciation against the dollar over the past 10 months.

PLN gets revenue in rupiah, but it pays several components of productions in dollar, including fuel (gas, diesel fuel, geothermal), power supplied by the Independent Power Producers (IPPs), spare parts and loan installment, Djiteng said.

PLN data projects the company will spend this year $590 million to buy gas, $400 million to buy electricity supplies from IPPs, $79 million to buy geothermal energy from the contractors of state oil and gas company Pertamina, $288 million to purchase spare parts and another $103 million to service its debts.

It buys gas from the ARBNI and ARII, the Indonesian subsidiary of America's Atlantic Richfield Co. (ARCO), Kodeco of South Korea, the state gas distributor PGN and Exspan of the Medco Group, at prices between $2.45 and $3 per million British thermal units.

PLN has signed 26 power purchase agreements with IPPs but only two have come on stream, including the Sengkang combined cycle power plant in South Sulawesi, and the Salak geothermal power plant in West Java.

Two other private generators are scheduled to come on stream this year, including the Dieng geothermal power plant in Central Java and the coal-fired Paiton I power plant in East Java.

The Dieng power plant, owned by a consortium led by CalEnergy of the United States, will come on stream in several weeks, while the Paiton I power plant, owned by the consortium of PT Paiton Energy Co., is set for November. (jsk)