Unocal seeks to avoid write-off of PLN debt
Unocal seeks to avoid write-off of PLN debt
SINGAPORE (Bloomberg): Unocal Corp., the 10th largest U.S. oil company by market value, said it hopes to avoid any write-off of money owed by Indonesia's PT Perusahaan Listrik Umum Negara (PLN) from unpaid power supply contracts.
Subsidiary Unocal Geothermal said in June the Indonesian utility owed the company about $47.4 million for March steam deliveries to the Gunung Salak power plant.
"There is no question that PLN is in financial trouble, (and) I am sure we will have to help them," although we do have a government-backed guarantee for that contract so we hope this will not involve writing off debt, said Unocal chief executive officer Roger Beach to the Bloomberg.
He added that any loss from the power supply contract with PLN won't figure prominently in the company's overall operations.
Sales at Unocal in 1997 stood at $5.78 billion, with some $290 million from Indonesia's geothermal operations.
The Indonesian government said in August that PLN, Southeast Asia's second largest company by as sets, would need to borrow Rp 117 trillion ($9 billion) from the government in the next five years, restructure debt and rewrite almost all of the company's supply agreements with companies, in order to stay afloat.
PLN incurs costs in dollars, yet sells power at subsidized rates in rupiah. The currency has lost 52 percent of its value against the dollar in the past 12 months, although the Indonesian government has kept utility prices steady.
Beach said recessions in Asia, including Indonesia, won't deter the company from investing in the region because he is confident of a turn-around. "We have been out here for 30-35 years," he said. "We are a long- time player. The governments like to do business with us because they know we are here to stay."
Despite economic problems in the region, Beach said he sees opportunities for Unocal.
For instance, demand for natural gas for power generation that the company produces and sells in Thailand is rising, as power suppliers switch from importing fuel oil and crude oil to using as from the local fields.
El Segundo, California-based Unocal, which has numerous gas concessions in Thailand, in August led a venture in signing a 15- year contract worth about $2.55 billion to sell condensate to the Petroleum Authority of Thailand.
Also, a new oil field which the company in August said it discovered off the coast of East Kalimantan, Indonesia, is expected to be what Beach called "a company maker." Though he said it was too premature to forecast possible earnings from the oil field.