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)