PLN to undergo major restructuring and reorganization

State-owned electricity company PT Perusahaan Listrik Negara (PLN) will undergo a major restructuring and reorganization to improve efficiency and business performance in all the company's business lines, Kompas reported Friday.

Under the massive restructuring and reorganization plan which was approved during the company's shareholders meeting in Jakarta last Tuesday, five distribution areas in Java and Bali would be managed and operated independently by PLN's new subsidiaries.

PLN's chief commissioner Alhilal Hamdi said that PLN in Jakarta would operate only as a holding company while the distribution activities would be carried out by subsidiaries.

As part of the program, before the end of this year, PLN would set up five subsidiaries to operate and manage distribution areas in Jakarta and Tangerang, West Java and Banten, Central Java, East Java and Bali, he said.

Alhilal said that the new subsidiaries would operate independently and would have the power to determine their own electricity tariffs according to their respective business condition and the buying power of their respective consumers.

"For example, the tariff in Bali can be higher than in Banten because the people's buying power in the province is relatively better than those in Banten," he was quoted as saying.

At present, PLN only has two distribution subsidiaries - PLN Batam and PLN Tarakan, which handle electricity distribution in Batam and Tarakan, Kalimantan, respectively. Other distribution areas are operated by PLN's branches.

As part of the restructuring and reorganization, Alhilal said that PT Indonesia Power and PT Pembangkitan Jawa-Bali would be split from PLN as independent state-owned companies.

The position of directors for power generation, commerce and transmission would be under the directors which supervise and control each distribution area, he said, adding that with the decentralization, the construction of new power plants would face less bureaucratic problem. (*)