PLN's debt to govt to soar to Rp 30 trillion,

State electricity company PT PLN's debt to the government will soar to Rp 30 trillion in year 2001 from Rp 21 trillion as of January 2000, and the government is considering three options to deal with PLN's soaring debt.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that the three options the government was considering included the transfer of the debt into equity provided that PLN's soaring debt was mainly resulted from the depreciation of the rupiah against the U.S. dollar.

The second option was that the government would never transfer the debt into equity if PLN's soaring debt was resulted from PLN's poor business performance just like many other state enterprises. If PLN's performance was bad because of, say, bad management, the government would not bail out PLN's debt because it could serve as a bad precedence for other state firms.

And the third option was that the government would repay PLN's debt without any conditions attached.

"All these options are being discussed by the presidential decree (Keppres) 133/2000 team. Whether the government will bear the debt resulted from the rupiah depreciation factor, or all the debt, it will depend on this team," Purnomo said, referring to a team established under a presidential decree No. 133/ 2000 to save PLN from bankruptcy.

Purnomo also said that the government was considering giving income tax exemption to PLN income resulted from asset revaluation provided that the revaluation could be completed by January 2001, when the new tax law would come into force.

Purnomo did not give further details and only said that PLN's assets would expand drastically after revaluation because most of PLN's fixed assets were denominated in U.S. dollar.

Nevertheless, according the government's tax rules, the difference in the value of assets resulted from assets valuation would be subject to 10 percent income tax.

PLN president Kuntoro Mangkusubroto said PLN's assets were currently valued at Rp 68 trillion. After revaluation, the assets would expand to Rp 193 trillion, with an assumption of Rp 8,000 per U.S. dollar. If the rupiah stayed at the current level of over Rp 9,000 per U.S. dollar, PLN assets would expand further.

According to Kuntoro's calculation, if the government did not give tax exemption to PLN, the company would have to pay income tax of Rp 10 trillion from assets revaluation. He noted that the value difference after revaluation would be around Rp 120 trillion (Rp 190 minus Rp 60 trillion), and this value would be reduced again by PLN's this year net losses of around Rp 20 trillion, and it would come taxable income of Rp 100 trillion.

"With income tax of 10 percent, the tax that we must pay will be Rp 10 trillion. Which money will we use to pay that tax? It means that we have to borrow from the government again," he said.

He said that PLN would let the government decide on the future of PLN because "PLN belongs to the government." (*)