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Lawmakers deny PLN’s request for $651m, citing poor business plan
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House Commission XI chairman Kahar Muzakir (middle), House Commission XI deputy chairman Amir Uskara (left) and Dolfie O.F.C (right) speak with each other after reading out lawmakers’ decision on a new OJK supervisory body on April 8, 2022. (The Jakarta Post/Vincent Fabian Thomas)
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awmakers have rejected state-owned electricity firm PLN’s request for Rp 10 trillion (US$651.4 million) in public funds for the improvement of the country’s energy infrastructure, pointing to a lack of clarity on the utility’s priorities and use of funds.
House of Representatives Commission XI overseeing financial affairs vetoed the infusion, which had been provided for in this year’s state budget.
“We don’t get the full picture. It’s unclear. But [PLN] suddenly asked for Rp 10 trillion which it said will reduce its financial burdens. But we don’t see PLN’s efforts on other fronts – in efficiency, for instance,” said Commission XI deputy chair Dolfie Othniel Frederic Palit on Wednesday.
PLN president director Darmawan Prasodjo told lawmakers on Wednesday that Rp 3.78 trillion of the proposed injection would fund the construction of transmission and power grids. The remaining Rp 6.22 trillion would be earmarked for renewable power generation for villages.
With the requested funds, PLN planned to electrify 2,146 villages in the rest of 2023 and another 2,384 villages next year.
The project was infeasible from a market-economic standpoint so would require public funding, Darmawan argued.
“This Rp 10 trillion is an investment with a miniscule return on investment. The return on investment will be significantly lower than the cost of funds if we use global bonds [to fund the project],” said Darmawan.
