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)