PLN defaults Rp 40 trillion debt to creditors

State electricity company PT PLN has defaulted Rp 40 trillion (US$1=Rp8700) in debt payment to creditors because the company still uses the fund to finance its operation due to its financial difficulty, according to company director for marketing and distribution Eddie Widiono S.

Speaking at a discussion with the Association of Indonesian Textile Producers (API), Eddie noted that the financial difficulty served as one of the reasons why PLN insisted to defend the massive electricity tariff increase for industrial customers.

But Eddie did not give further explanation on the withholding of the debt payment to creditors. He further explained on the reasons why PLN insisted to defend the new tariffs. He explained that PLN could not change the tariffs, but the company could negotiate with its customers over the payment of the electricity bills.

Because of the cash flow problems and the crisis, Eddie said PLN could not expand its capacity and meet demands from about 4 million new potential customers. PLN was even forced to cut electricity supplies to about 50,000 of its customers because they did not pay their bills fully. Meanwhile, API chairman Benny Soetrisno complained about the new tariff increase because it was conducted together with other increases of other production components such as labor wages.

Responding to Benny's complaints, Eddie explained that the new tariff increase was actually the abolishment of subsidy for industrial customers, who had been enjoying the subsidy for so long. He noted that the subsidy would be given only to small household customers. Besides, the new tariff increase had been consulted by the government with the House of Representatives, and the House approved the increase.

In the same occasion, legislator Pramono Anung of the Indonesian Democratic Party of Struggle defended the new tariffs increase. He noted that industrial customers were not the ones that qualified for subsidy. And therefore, it was not fair for the government to continuously subsidize large industries.

Besides, Pramono said, PLN would go bust if electricity tariffs were not increased and at the same time the government abolished subsidy for industrial customers. He noted that for this year alone, PLN was facing a deficit of Rp 32 trillion. (*)