PLN wins President?s approval to obtain foreign loans

President Megawati Sukarnoputri has formally approved the proposal of the state owed electricity company PLN to raise foreign loans worth about US$800 million to cope with the acute shortage of the electricity supply in the country, Suara Karya reported on Friday.

The President?s approval was unveiled by Minister of Energy and Mineral Resources Purnomo Yusgiantoro and PLN president director Eddie Widiono during a seminar in Makassar on Thursday.

Eddie said the loans would come from donor countries such as Belgium, Denmark as well as from the Asian Development Bank (ADB). The financial assistance will be in the form of credit exports, and two-step loans.

According to Eddie, the loans had been approved by the donor countries years ago but the ministry of finance then delayed the disbursement on fear that PLN, which was at the peak of its financial difficulties at the time, could not repay the debts.

During the seminar, Minister Purnomo said that the country at present suffered a shortage of electricity supply of about 313 MW during peak hours. The power shortage hits 28 areas in the country, particularly in Sumatra and Kalimantan.

The minister said that if PLN did not build new plants or expand the capacity of the existing ones, the shortage of the power supply could reach 1,300 MW in 2004, when the total demand was projected to increase to 500 MW.(*)