State power firm eyes listing in New York

State power firm eyes listing in New York

JAKARTA (JP): Power producer PT PNJB I, a subsidiary of state-
owned PT PLN, plans to list its shares on the New York Stock
Exchange by 2002, the company's corporate secretary said on
Wednesday.

Lili Tjarli Tahlan said the company wanted to attract foreign
funds to help finance its expansion.

"According to our IPO (initial public offering) consultant, it
would be best to list our shares twice, here in Jakarta and
abroad, to meet our investment needs," Lili said on the sidelines
of a seminar held by the Indonesian Electrical Power Society.

He said the company would list its shares on the Jakarta Stock
Exchange by late 2001 before trading its shares on the NYSE.

Through the local listing, the company hopes to raise funds to
boost its working capital, while the New York listing is aimed at
raising foreign funds to finance the company's expansion, he
said.

Lili estimated only half of the funds required for the
company's expansion and eventual privatization would come from
its New York listing. "We're confident the local market is
rebounding and will become a better alternative for raising
financing."

He dismissed worries PLN's poor financial performance would
discourage investors. According to him, financial auditors have
found PNJB to be financially sound.

This is not the case with PLN, which buys power from PNJB and
other independent power producers. PLN has booked losses since
the economic crisis struck in 1997.

In the first semester of this year, PLN's net loss swelled to
Rp 11.58 trillion from Rp 974 billion during the same period last
year. The company's January-June 2000 loss exceeds PLN's net loss
of Rp 11.3 trillion for all of last year.

Lili said PNJB had continued to show profits despite the
crisis, but estimated this year net profit would only equal last
year's Rp 280 billion.

The Jakarta Stock Exchange requires companies to book net
profits for two consecutive years prior to listing their shares.

"Now we only have to wait for the government's approval, while
it was our holding company, PLN, that actually asked us to list
abroad," he said.

The government, he said, had been planning to privatize PNJB I
in 1996, but the economic crisis forced it to put the plan on
hold.

Once listed in New York, Lili said, PNJB expected to expand
its power capacity by 500 megawatts (MW) a year from its current
capacity of 7,318 MW.

PNJB generates some 54 percent of the power for Java and Bali,
which PLN then distributes.

Lili said with energy demand growing each year by about 12
percent, the company needed to invest in more power stations to
maintain its 54 percent market share. According to him, Java and
Bali were at risk of suffering power shortages by 2003 or 2004 if
the power sector did not increase investment.

New electricity laws expected to be enacted shortly may help
PNJB compete against foreign power investors, he said.

According to Lili, the government plans to make Java and Bali
regions where electricity rates will be determined by the market.
As stipulated in the draft of the new electricity bill, rates in
these "competition zones" will be subject to the supply and
demand of power, he explained.

Lili also said PNJB was able to produce electricity relatively
cheaply and was confident it would overcome the competition.

Most independent power producers (IPP), which are owned by
international energy companies, sell their power at higher rates
than the rates PLN charges the public.

PLN has attributed the high cost of purchasing power from IPPs
as the main reason for its continued financial losses.

"Once the competition zones in Java and Bali are applied,
power producers with high rates won't be able to compete," Lili
said.

The president of PNJB I, Firdaus Akmal, meanwhile, said that
as part of the plan to take the company public, it recently
changed its name to Indonesian Power.

"We can't go by the names Java and Bali if we intend to expand
our business nationwide and even go international," Firdaus said.
"We plan to officially launch the new name in October, when we
celebrate PNJB's fifth anniversary."

The company was founded on October 3, 1995, as a subsidiary of
PLN. (bkm)