Two PT PLN subsidiaries to go public
JAKARTA (JP): Subsidiaries of the state-owned electricity company PT PLN are to float their shares internationally in the near future, President Soeharto said yesterday.
Speaking at the opening of a three-day working conference of the Ministry of Mines and Energy at the State Palace here, the President cautioned that the international flotation should be prepared carefully.
"The success of PT Tambang Timah (the state-owned tin mining firm) should be taken as a valuable lesson in the international floating of shares of other state companies," he said.
Tambang Timah listed some of its shares on the London, Jakarta and Surabaya stock exchanges last October.
Last year PLN set up two subsidiaries -- PT PLN Pembangkit Jawa Bali I and PT PLN Pembangkit Jawa Bali II -- as preparation for its privatization.
The two subsidiaries are assigned to manage electricity power plants and distribution on Java and Bali.
PLN, which had total assets of Rp 24 trillion (US$10.3 billion) at the end of last year, expects to make a net profit of Rp 1 trillion this year.
President Soeharto considered the international flotation of state-owned mining and energy companies as part of the government's efforts to promote the role of the private sector in these sectors.
He noted that current development in the mining and energy sector, particularly in the upstream industry, is still dominated by state-owned enterprises.
"Due to financial constraints, the government cannot increase its investment in these sectors and, therefore, is encouraging the private sector to take part in its development."
Soeharto cited as an example the need to find new oil reserves. "If we don't find any new oil reserves, we'll become a net oil importer between the year 2005 and 2010," he said.
The President also asked the Ministry of Mines and Energy to improve its efficiency. "Every project that requires a big investment should be very carefully assessed," he said.
He called for a greater use of locally-made products in mining and energy activities.
At yesterday's inaugural ceremony, Minister of Mines and Energy I.B. Sudjana mentioned the need to streamline the bureaucracy and to modernize state-owned enterprises.
"This is necessary to sharpen the competitive edge of our mining and energy products," he said.
He noted that one way to do it is to allow state-owned firms to go public. Another way is by promoting what he called "cross fertilization", cooperation, between subsidiaries of state-owned companies or between them and other modern companies with better management.
The ministry currently oversees seven state-owned companies: Pertamina, Tambang Timah, PT Tambang Batubara Bukit Asam, PT Aneka Tambang, PLN, PT Gas Negara and PT Koneba. There are 178 state-owned companies in Indonesia.
Minister of Finance Mar'ie Muhammad told the meeting that 86 companies have been assessed as less than healthy and not entirely sound.
"This shows that they are not efficient and we are very concerned about their condition," Mar'ie said, in a written speech read out by Secretary-general of the Ministry of Finance Dono Iskandar.
Mar'ie stressed that if the government continues to tolerate such inefficiency, it may affect the national economy as the state companies operate in almost all its sectors.
He said that state-owned companies, with total assets of Rp 300 trillion, should become the vanguard and backbone of the efforts to improve overall economic efficiency.
The inefficiency he blamed on two factors, namely poor management and too much government interference and said that privatization is the way to remedy the situation.
"We're currently finalizing a reform package for the state- owned enterprises," he said, adding that it will be announced in the near future. (13)
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