PLN prepares measures to cope with fuel price increase

State owned electricity company Perusahaan Listrik Negara (PLN) has prepared a number of actions that will be taken by the company in coping with the government's plan to increase the fuel prices,Investor Daily reported on Tuesday.

PLN president director Eddie Widiono said in Jakarta on Monday that the planned set of actions would be soon submitted to the government for approval.

In the proposed scenario, PLN had arranged two possible actions in coping with the possible increase in fuel prices including to increase the tariff or to get a compensation fund from the government for the company's public service obligation.

But Eddie did not unveil either the percentage of the tariff increase or the amount of the compensation fund proposed by PLN. But he said that in the 2005 state budget, the government provided a subsidy of Rp 3.5 trillion to low income customers.

According to Eddie the increase in the fuel price would automatically result in the increase in PLN's operating costs. "A 40 percent increase in the fuel price will result in an additional cost of Rp 8 trillion a year," he said.

At present, about 60 percent of PLN's expenditures for the operation of its power plants are allocated for the procurement of fuel. PLN spent about Rp 14.88 trillion for the procurement of fuel in 2004, much higher than Rp 12.82 trillion in 2003 and Rp 8.84 trillion in 2002. (*)