WB to inject $400m into state electricity

JAKARTA (JP): The World Bank has pledged US$400 million in aid to the state electricity company PT PLN for the electrification of 7,000 villages in the country during the next two fiscal years.

"The aid, arranged on behalf of the government, is scheduled to be signed by Minister of Finance Mar'ie Muhammad and a World Bank executive in January next year," Minister of Mines and Energy I.B. Sudjana told reporters during a break at a hearing with the Commission VI of the House of Representatives yesterday.

The commitment, which was made after negotiations with the bank went on for almost a year, clearly shows the PLN electrification program is feasible, Sudjana said.

PLN's president, Zuhal, said the bank approved the aid with a maturity of 20 years, including a grace period of seven years, and an interest rate of eight percent per annum.

"The aid, which will be the first to be received by PLN for its rural electrification program, will be used for the construction of electricity distribution stations and the development of distribution networks," he said.

The commitment was made early this week at the World Bank's headquarters in Washington after a meeting between the bank's executives and an Indonesian team, headed by Director General of Electricity and Energy Development Artono Arismunandar.

The Indonesian team included officials of the Ministry of Finance, the National Development Planning Board, the Ministry of Cooperatives and Small Enterprises and PLN.

Cooperatives

"Of the $400 million aid to be provided by the World Bank, some $2.5 million will be allocated for cooperatives to get involved in the program under the coordination of the Ministry of Cooperatives and Small Enterprises," Zuhal said.

With the electrification of 7,000 villages under the World Bank auspices, PLN will still look for other loans from various institutions for its electrification program at some 11,619 villages throughout the country during the current sixth Five Year Development Plan (Repelita VI) period, he said.

Zuhal was optimistic that last month's increase in the electricity billing rates would help PLN increase its capability to finance its rural electrification program.

He said only 31,689 of the country's 61,975 villages had been electrified as of March this year.

"Due to our limited budget, I estimate that during the Repelita VI period, we can extend our electrification program only to 18,619 villages," Zuhal added.

He expects that PLN will have electrified all 61,975 villages by 2004. (fhp)