Government settles PLN debt with Pertamina

An earlier threat by state oil and gas firm PT Pertamina to cut fuel supplies to state power utility PT Perusahaan Listrik Negara (PLN) is unlikely to materialize as the government has stepped in to help settle PLN?s massive debts to the oil firm. The Jakarta Post reported on Thursday.

PLN acting president director Djuanda Nugraha Ibrahim said Wednesday that the government had agreed to swap part of the company?s debt to Pertamina for Pertamina?s debt to the government.

?The offset will initially cover debt worth Rp3.5 trillion (US$376 million). Since both companies are owned by the state, it is just like transferring money from the right pocket to the left,? said Djuanda after a meeting with Vice President Jusuf Kalla.

Pertamina had earlier threatened to cut its fuel deliveries to PLN by 50 percent starting next month as the company had not paid installments on its debts, totaling Rp 23.9 trillion, for a considerable period of time.

It was feared that the threat, if realized, could cause massive- blackouts in some parts of the country as PLN still uses a significant amount of petroleum-based fuels to fire its generators.

Djuanda, however, claimed that the PLN?s debts to Pertamina only totaled Rp 17 trillion.

PLN officials had previously said that the power utility could not pay Pertamina as the government had yet to pay its subvention to PLN.

As a result of high global oil prices and a failure to apply efficiency measures, PLN recorded a loss of Rp 4.92 trillion last year, compared with Rp 2.02 trillion the year before. (*)