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PLN state power utility targets first-ever net profit this year
State power firm PT PLN announced Wednesday it was targeting to book Rp 1
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State power firm PT PLN announced Wednesday it was targeting to book Rp 1.7 trillion (US$151.3 million) in net profits this year, the first profit since it was established.
"We expect PLN to book its first profit this year," PLN president director Fahmi Mochtar told reporters after a meeting with the government to discuss the company's annual work plan.
In 2008, PLN generated Rp 83.8 trillion in sales revenue and booked Rp 3.57 trillion in operating profits. The figures are higher than its initial targets to book Rp 79 trillion and Rp 536 billion in sales revenue and in operating profits, respectively.
Despite this the company in 2008 suffered a Rp 5.6 trillion net loss, 6.7 percent lower than the Rp 6 trillion loss booked a year earlier.
The company in part attributes its prolonged history of making losses to the assumption that it should sell power at subsidized rates.
Currently, PLN sells electricity at an average price of Rp 650 per kilowatt-hour (kWh).
The rate is lower than its prevailing average production cost of Rp 1,300 per kWh.
This year however, it is targeting to raise revenue by 7 percent to Rp 89 trillion and to record a net profit.
Fahmi said it is possibe for PLN to make a margin this year as it has been able to cut its average production cost to Rp 1,022 per kWh due largely to lower fuel oil prices and less consumption of oil-based fuels.
In 2009, PLN plans to produce 136,000 gigawatt-hours (GWh) of electricity, 6.6 percent higher that the 127,600 GWh in 2008.
Of this total production, 17.8 percent will be from oil-based fuel power plants, down from 23 percent last year.
Through converting more oil-fired power plants to generation from coal and gas, PLN expects to be able to cut its oil-based fuel consumption from 11 million kiloliters in 2008 to 7.9 million this year.
This cut in oil fuel use will reduce the required power subsidy from Rp 88 trillion to Rp 46 trillion.
"We keep working to improve our efficiency to serve our increasing numbers of costumers," Fahmi said.
PLN has been implementing the government-initiated construction of power plant projects to supply 10,000 megawatt (MW).
To complete this first program by 2010, PLN still needs Rp 17.33 trillion ($1.55 billion) to finish building 30 new power stations and Rp 8.58 trillion for transmission systems.
Fahmi said some local banks outside Java have announced they are interested to help PLN complete the financing of power plants off Java.
"The amount is around Rp 4 trillion," Fahmi said. (hwa)
