Business

Dahlan Iskan named to lead
state power utility PLN

The government has selected the new president director of troubled state power utility PT PLN.

The hot seat goes to media mogul Dahlan Iskan. He will have a tough job, slated to start before the end of this year.

“We’ll just wait for the inauguration,” State Minister for State Enterprises Mustafa Abubakar said Tuesday. Mustafa refused to name the replacement of current PLN president director Fahmi Mochtar, but gave a brief nod when Dahlan’s name was mentioned.

Dahlan Iskan, chief executive officer of the Jawa Pos Group, has been named as a strong candidate to replace Fahmi. Apart from his position at Jawa Pos, Dahlan is also president director of two independent power producers: PT Cahaya Fajar Kaltim in East Kalimantan and PT Prima Electric Power in Surabaya.

In a meeting with journalists on Monday, Dahlan admitted that he had taken a qualifying test for the position starting on Nov. 2. For the test, he said, he had met with selection teams from the energy and mineral resources ministry, state enterprises ministry, finance ministry and the vice president’s office.

“I have signed a [terms of reference and] performance contract,” Dahlan said.

Media reports said that Dahlan would be inaugurated on Wednesday afternoon. Dahlan could not confirm. “I don’t know about the inauguration, but I was told by the state enterprises ministry not to go anywhere,” he said Tuesday evening.

The government began selecting a new PLN leader to replace Fahmi Mochtar since massive blackouts have occurred in Greater Jakarta from September to the third week of December.

PLN’s labor union rejected Dahlan, saying that he was not competent to lead the company. The union added that replacing top management would not improve PLN as the company’s main problem comes from the regulated tariff which is below the production cost and at the same time the subsidy does not cover the budget for investment.   

Besides a change of president director, Mustafa said the government would also eliminate the position of vice president director, now held by Rudiantara.

“We’re adjusting to the conditions. The directors hinted that it would be more appropriate without a vice president director,” Mustafa said without elaborating.  

On Tuesday Mustafa and Fahmi met Coordinating Minister for the Economy Hatta Radjasa and State Minister for National Development Planning Armida Alisjahbana to address the current electricity shortages faced by Indonesia, which  often lead to complaints by businesses.

Fahmi, attributing the current shortage due to the lack of financing, said PLN would acquire Rp 32.7 trillion needed in 2010 to solve the shortage problems. Rp 10 trillion will be provided by the government through a subsidized loan with a zero interest rate, he said.

The government will raise the money by issuing bonds, said Dedy Priatna, deputy to the state minister for national development planning, in charge of infrastructure.

Fahmi said the government would try to raise the margin of PLN from 5 percent to 8 percent to allow the company to qualify to generate financing from bond issuance amounting to Rp 22.7 trillion.
“It will be both a domestic and foreign [issuance],” he said.

Fahmi said the Rp 32.7 trillion would be used to finance electricity nationwide, including in Jakarta where PLN runs rotating blackouts.

Armida said availability of electricity supply would be a major factor influencing  investment in 2010.

Indonesia is eyeing 5.5 percent economic growth next year, hoping to attract inward investment as the global economy has begun to recover. This year the economy is estimated to grow at 4.3 percent.

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