Some 22 SOEs suffer US$2.4 billion in losses

Some 22 SOEs suffer US$2.4 billion in losses

JAKARTA (JP): Director general of state-owned enterprises
(SOEs) I Nyoman Tjager said on Wednesday that some 22 SOEs
suffered combined financial losses of Rp 27.78 trillion (US$2.40
billion) last year.

Tjager did not name the companies, but according to a
government document, the largest loss was experienced by the
state-owned electricity company PLN with total losses of around
Rp 22.55 trillion, followed by investment bank PT Bahana (Rp 3.34
trillion), Bank BTN (Rp 1.36 trillion), Merpati Nusantara
Airlines (Rp 145 billion), paper maker PT Kertas Kraft Aceh (Rp
61 billion), and plantation firm PTPN I (Rp 52.6 billion)

"In fiscal 2000, some 22 SOEs were estimated to have suffered
financial losses," he told the House of Representatives'
Commission IX on the state budget and finance during a working
meeting.

In 1999, some 20 SOEs were reported to have suffered combined
losses of Rp 47.65 trillion. Many of these SOEs were state banks,
which had been badly hit by the 1997 financial crisis.

Tjager said that PLN suffered heavy losses because of the huge
burden resulting from power purchase contracts with independent
power producers (IPPs).

Under these power purchase contracts, PLN must purchase power
from the IPPs at 6 U.S. cents per kWh, which is must higher than
its average selling price.

The contracts were signed with 27 IPPs in the early 1990s to
anticipate growing power demand, but the 1997 economic crisis
slashed the demand for power and led to a plunge in the value of
the rupiah, the currency in which PLN revenue is denominated.

Tjager added that the low electricity prices in the country
compared to other countries in the region had also contributed to
the losses.

"To resolve the problem, the government has initiated various
restructuring measures including measures in the fields of
business operations, debt, organization and human resources, as
well as implementing good corporate governance," he said.

Tjager said that the losses suffered by financial institutions
were primarily caused by exchange rate losses, and negative
spread problems as interest rate income was lower than interest
costs.

He added that the losses experienced by plantation firms were
linked to a significant drop in commodity prices, and the
unfavorable security conditions.

Since the downfall of former authoritarian president Soeharto,
plantation firms have had to deal with land grabs by local people
and the looting of plantation crops.

Tjager did not refer to the condition of the remaining 120
SOEs, but the government document said that they had only
reported combined profits of around Rp 8 trillion.

Tjager also failed to explain the reason behind the financial
losses suffered by Bahana.

Coordinating Minister for the Economy Rizal Ramli had planned
to merge the loss making company with another state-owned
securities firm PT Danareksa Securities as part of the
restructuring of Bahana.

The merger as well as a management reshuffle was supposed to
have been completed by the end of last month, but so far no
progress has been reported.

The government is planning to sell its shares in around 16
SOEs this year as part of the overall privatization program aimed
at raising around Rp 6.5 trillion to help finance the 2001 state
budget deficit. (rei)