PLN likely to revise investment plans

State-owned electricity company PT Perusahaan Listrik Negara (PLN) may have to reconsider its investment plans for 2010 following the House of Representatives? rejection of its request to raise margin from the current 5 percent, Jakarta Post reported Tuesday.

?With the 5 percent margin decision, PLN cannot make the investments detailed in its business plan. We must reevaluate our investment plans and find other ways out,?PLN president director Fahmi Moctar told reporters Monday.

On Aug. 24, the House?s Commission VII overseeing energy and mining affairs approved of PLN?s request to have its margin?s raised to 8 percent for 2010. But, last week, the House?s budget committee rejected the proposal.

As a state company, PLN?s margin is given in the form of government subsidies.

PLN?s says that with the 5 percent margin, and with the Indonesian Crude Price (ICP) set at US$60 per barrel in the state budget, a total of Rp 44.37 trillion in electricity subsidies will be made available. This will change to Rp 48.38 trillion if the ICP reaches $70 per barrel.

Within the same ICP range, if the margin was 8 percent, subsidy spending would be between Rp 48.31 trillion and Rp 52.50 trillion.

Vice president of PLN, Rudiantara, said PLN would receive an additional Rp 1.4 trillion in subsidies for each 1 percent raise in its margins.

?With the 1.4 trillion in supplied funds, we will be able to attract financing, either through banking loans or selling bonds, up to Rp 3 trillion,? Rudiantara said.

Fahmi added that, with the 5 percent margin, the company would only able to maintain its cash flow at a level that will allow it to avoid technical debt defaults, but not provide much room for investment. (*)