Indonesia Power may delay $501m share sale

PT Indonesia Power, a unit of the country?s state utility, may postpone until 2007 a Rp 4.7 trillion (US$501 million) share sale, the nation?s biggest initial public offering.

The unit may delay the initial public offering because it needs to revise plans for new plants after the government ordered parent PT Perusahaan Listrik Negara (PLN) to add generating capacity, Abimanyu Suyoso, president of Indonesia Power, said in Jakarta Wednesday.

The government dropped a plan to raise electricity tariffs in March and ordered PLN to build coal-fired power plants to generate an additional 10,000 megawatts within three years to cut dependence on costly oil.

PLN may assign Indonesia Power to construct two units of 660 megawatts each in Suralaya in West Java, Suyoso said.

?I don?t think it?s possible to conduct the IPO this year due to the big changes in future plans,? Suyoso said. The company plans to sell a 10 percent stake to investors in the first half of 2006, Suyoso said on Dec. 1.

Indonesia Power will sell new shares and PLN will sell part of its stake in the unit, he said Indonesia Power has capacity to generate 9,000 megawatts of electricity. The company sells electricity to PLN, which lacks the funds to build power plants to meet demand because of state caps on fuel tariffs.

At least 47 more power stations and 14 high-voltage transmission lines will be required in the next 10 years, Listrik Negara estimated last year.

Indonesia needs to spend about $27 billion on new plants and power lines by 2012 to meet demand, according to the World Bank. Investment last year totaled $1.2 billion.

The biggest share sale in the Southeast Asian nation was the government?s sale of a 41 percent stake in PT Bank Rakyat Indonesia in October 2003, which raised 4.17 trillion rupiah. (*)