Govt approves PLN?s plan to issue Rp1 trillion bonds in 2004

The government has given its approval to the plan to issue Rp1 trillion bonds in 2004 by state-owned electricity firm PT Perusahaan Listrik Negara (PLN), Investor Indonesia newspaper reported on Wednesday.

This approval will be seen as an effort to provide funding for PLN as there will not be any hike in electricity prices in 2004.

?We are supporting the PLN?s plan to issue bonds as an alternative source of income to finance the investment activities,? Minister of Energy and Mineral Resources Purnomo Yusgiantoro said during a meeting with the House of Representatives? Commission VIII in Jakarta on Tuesday.

Purnomo admitted that the government understands the financial difficulties of PLN. However, the government and the House have already decided not to raise electricity rates.

It must be noted PLN will be losing Rp 800 billion in potential revenue due to the cancellation of planned price hike during the fourth quarter of 2003 itself, where as it will also lose Rp 3.1 trillion in revenue from the delay of hiking electricity rates for the whole year in 2004.

Several efforts have been made to reduce the financial burden of PLN. It has already asked the government for tax concessions, but the ministry of finance has sternly rejected the request.

?We must understand that tax is one of the sources of income for the government to finance the development. Therefore, it (government) can?t give tax concessions,? Purnomo said. (*)