World Bank advised not to force PLN to split assets

A non-government organization dealing with electricity affairs has advised the World Bank not to pressurize state power company PLN to split its assets in 2006.

"The World Bank should not force PLN to separate its assets in 2006 because competition between power plant operators will not occur until that year," the so-called Working Group on Power Sector Restructuring (WGPSR) in a press statement released Monday.

The bank reportedly had urged PLN to carry out the separation of its transmission and distribution business units into corporate transmission and distribution subsidiaries in competition provinces.

Moreover, the bank wanted PLN to no later than Sept. 30, 2007 establish independent successor generation, transmission and distribution companies from the company's operations in competition provinces.

WGPSR said in the statement that effective and efficient power competition in the Java-Bali area would not occur in 2007 partly because power supply in the area would remain limited in that year.

The current electricity law, which became effective in 2001, stipulates that within five years after the implementation of the law, the government will designate at least one area for free competition where licensed private companies will be free to develop power plants and sell their electricity to the public by themselves or through agents.

One of WGPSR's leaders, Binny Buchori, suspected the World Bank of having a hidden agenda to force PLN to private its assets so as to allow multinational corporations to acquire them.

Meanwhile, PLN president director Eddie Widiono said recently his company had no plan to divest its assets. (godang)