PLN offers three options to settle Kediri GITET project

State electricity company PT PLN is offering three options for the government and investors to settle controversy over the construction of the allegedly marked-up high voltage electricity relay station in Kediri, East Java.

The director general of electricity and energy development at the Ministry of Energy and Mineral Resources, Endro Utomo, said that the first option was to cancel the result of the first tender if the winners did not want to lower the project value to the acceptable level.

The second option would be to re-tender the project and seek financing alternative from Japan Bank International Corporation (JBIC) that offered an interest rate of 2 percent per month.

"JIBC has expressed its readiness to provide financing as long as there is no problems with the project. And PLN is currently seeking legal opinions on this mater," Endro said.

The third alternative, Endro went on, was to postpone the Kediri project, and build another relay station in South Surabaya, which would bear the functions of the Kediri project.

PLN and the government has postponed the construction of the Kediri relay station following allegations that the project value was marked up by some 30 percent, compared to similar project to be built in Depok, West Java.

PLN debt

Meanwhile, PLN president Kuntoro Mangkusubroto explained that PLN's debt that falls due this year totals Rp 2.25 trillion.

"So, it is not true that our due debt reaches Rp 9 trillion. What's true is that we put Rp 9 trillion in our budget, but in reality, it reaches only Rp 2.25 trillion," Kuntoro said, noting that the Rp 2.25 trillion debt included PLN's obligation to Paiton Energy.

Kuntoro explained that PLN's total short-term debt currently reaches Rp 43 trillion, including debt to independent power producers and the government.

Meanwhile, Kuntoro added that PLN's long-term debt reaches Rp 73 trillion. "Of the total obligations, 70 percent is from the depreciation of the rupiah against the U.S. dollar."

He explained that since the crisis PLN continuously suffered losses. Its annual revenues reached only Rp 22 trillion, while its production costs reached Rp 28 trillion.

"PLN will be able to book profits if PLN manages to perform efficiency, negotiate electricity prices with private producers and restructure its finance," Kuntoro said. (*)