PLN will lose Rp800 billion due to cancellation of power rate hike
Thursday, October 2 2003 - 03:14 AM WIB
?We will lose Rp 800 billion in revenue in terms of rupiah, but it will not be problem for PLN because of the increasing appreciation of the rupiah against U.S. dollar,? PLN?s president director Eddie Widiono Suwondho said in Jakarta.
The PLN has set a revenue target to Rp 58.68 trillion for 2003.
The income might have declined but the present rate is already close to 7 U.S. cents per kwh.
The PLN needs huge amount of investment to build an efficient distribution system to reduce the company?s electricity losses which are currently at 16 percent, PLN chief told Antara news agency on Wednesday.
?PT PLN?s current system still causes electricity losses,? Eddie said.
But Eddie emphasized that the 16 percent losses were relatively low compared to other nations and even the World Bank stated the PLN?s losses remained tolerable.
Meanwhile, the government urged PT PLN on Wednesday to raise funds from the debt market to finance its investment plans.
?PLN will have to calculate its investment scheme and to consider the debt market as a financial source for its investment, Minister of Energy and Mineral Resources Purnomo Yusgiantoro told reporters after opening the Indonesian Mining Conference 2003 on Wednesday in Jakarta.
On Tuesday, the government decided not to increase electricity rates for the fourth quarter of the year in view of strong and stable rupiah.
Though the government?s decision was taken to ease the financial burden of low-income people, it affects the company?s future investment plans, PLN director of transmission and distribution Herman Darnel Ibrahim said.
With electricity demand growing at 7 percent year, the PLN needed US$2.5 billion in investment funds -- $1.7 billion for the construction of new power plants and $800 million for transmission development ? Herman said.
PLN would, according to Herman, implement several efficiency measures to help strengthen the firm?s financial standing. It would focus its investment budget on distribution and improving services and try to reduce technical and non-technical losses.
Another cost-cutting measure would be to convert most of its oil-fired plants into natural gas-powered plants. Natural gas is a cheaper and cleaner fuel than oil.
Meanwhile, House of Representatives? Speaker Akbar Tandjung welcomed the government decision to cancel the plan to increase electricity rate. (*)