Burdened by private electricity, PLN suffers net loss of Rp 11.37 trillion

State electricity company PT PLN booked a net loss of Rp 11.37 trillion in 1999, of which Rp 5 trillion was to buy unneeded private electricity. This makes PLN a state company that suffered the largest loss in 1999.

A deputy for mining industries, strategic industries, energy and telecommunications at the office of the state minister of investment and state enterprises development, Harry Susetyo, said that his office had issued a decree No. Kep-215/M-PBUMN/1999 that classified PLN's performance as bad.

He noted that the large loss suffered by PLN was mostly driven by the low basic electricity tariffs, the high interest cost, the procurement of private electricity and inefficiencies in the company.

Last year, the basic electricity tariffs that contributed the largest income to PLN were not raised. PLN sold its electricity at between RP 109.5 to Rp 140 per kilowatt per hour (kWh), while the cost per kWh of electricity stood at Rp 240.

And then negotiations with independent power producers had not yet borne fruit, and consequently, PLN had to pay Rp 5 trillion to procure unneeded electricity from IPPs. PLN president Adhi Satriya said that the portion of private electricity procurement cost to the total loss could increase to 50 percent or even 55 percent in the coming years, if negotiations with IPP could not bring about changes to tariff structure.

PLN produced 80,497 GWh of electricity last year, and was forced to procure 4,279 GWh from IPPs. Meanwhile, PLN only managed to sell 71.332 GWh to its 27.5 million customers last year

Besides, the restructuring of its huge debt had not yet approved by the government. PLN had proposed a debt to equity swap arrangement to the government to reduce PLN's financial burden. But the government had yet given its response.

All those factors financially burdened PLN last year. (*)