PLN settles arrears worth Rp 6 trillion to Pertamina

State owned electricity company PLN will soon pay its arrears of up to Rp 6 trillion to state owned oil and gas company Pertamina, Investor Daily reported on Monday.

PLN's president director Eddie Widiono Suwondho said in Jakarta on Sunday that the payment would be made as soon as possible because the government had disbursement subsidy funds worth about Rp 7.7 trillion to the electricity company in December.

He said that part of the subsidy funds would be used to pay tax arrears to the ministry of finance, and about Rp 6 trillion to pay the arrears to Pertamina. "Only about Rp 900 billion of the total funds will be used to strengthen PLN's cash flow," he said.

Eddie said that PLN was in arrears of about Rp 6 trillion to Pertamina for fuel payments for the period of between January and November. The arrears for the period of January to September reached Rp 2 trillion, while those for the period of October to November totaled about Rp 4 trillion.

PLN's fuel spending sharply increased to Rp 37 trillion in 2005 from only about Rp 27 trillion in 2004 due to the sharp increase in fuel prices. "We hope the business will be much better this year thanks to the downward trend in prices of the diesel fuels, " he added.

Pertamina lowered the price of industrial diesel fuel to about Rp 5,180 from Rp 5,940 last week following the fall in the price of crude oil in the international markets during the past two months. (*)