PLN may ask for additional subsidy

The management of state electricity company PT Perusahaan Listrik Negara (PLN) will most probably ask for an additional government subsidy if there is an increase in the coal prices, Investor Indonesia newspaper reported in its Monday edition.

PLN will need an additional subsidy to reduce the operating costs of the company.

?Asking for an additional subsidy is our right. If there will be a significant increase (in coal prices), it will be a burden on PLN?s finances. What can we do?? PLN?s president director Eddie Widiono told Investor in Bogor last weekend.

Eddie?s comments came after state-owned coal producer PT Tambang Batu Bara Bukit Asam (PTBA) announced it would increase the sale price of its coal to PLN following the rise in global coal prices.

PTBA will raise the price through an amendment to the existing purchase agreement. The agreement will be signed soon.

PLN earlier said it would spend Rp 19 trillion on the purchase of oil, natural gas and coal in 2004.

This amount will be an increase of 7 percent, compared to the 2003 fuel spending.

Still, the biggest spending will be on oil. ?The supply of natural gas to several power plants, especially in East Java, is not enough. That?s why, oil must be used,? PLN?s director of power plants and primary energy Ali Herman Ibrahim said in Jakarta recently.

Ali mentioned that PLN would spend Rp 12 trillion on oil, Rp 3.6 trillion on natural gas and Rp 3.4 trillion on coal

The government has allocated a Rp 3.3 trillion subsidy for electricity in its 2004 budget.

?This calculation will be based on the assumption that the 2004 coal price will be the same with the price in 2003,? Ali said. (*)