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PLN plans to setup NewCo as coal power holding
The unions cited their concerns over privatization and potential price hikes as part of their objections to the alleged plan, which they learned from a letter requesting information on 11 power plants.
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tate-owned electricity monopolist PLN plans to set up a holding company for coal-fired power plants (PLTU), reportedly dubbed NewCo.
Three PLN unions stated on Tuesday that they learned about the plan in a letter dated May 4, a photograph of which they showed to reporters.
The letter requests permits, certificates and data in relation to the operations, build and maintenance of 11 coal power plants for a “Study on Monetizing PLTU Assets (NewCo)”, and explains that the information would be used in PLN’s plan to transfer its PLTU assets to the new company.
“This discussion has been going on for about two months, and in a great hurry. Most recently, it was just discussed at the [PLN] head office,” PLN Labor Union (SP PLN) secretary-general Bintoro Suryo Sudibyo said on Tuesday.
The coal power plants are all located on the islands of Java and Bali. They comprise nine PLTUs under PLN’s direct ownership, one plant that belongs to subsidiary PT Indonesia Power and one plant belonging to PT PLN Jawa Bali (PJB), another subsidiary.
The list includes the gigantic Suralaya and Paiton power plants, which are among the biggest in Southeast Asia.
Citing concerns over privatization, the union opposed the plan to establish the PLTU holding company as well as a previously reported plan to establish a separate holding company for geothermal power under PT Pertamina Geothermal Energy (PGE).
Read also: Indonesia to form ‘world’s largest’ geothermal holding firm
“[The PLTU holding company] is still in the process of early stage studies,” PLN spokesman Agung Murdifi told The Jakarta Post on Wednesday.
Secretary-general Andy Wijaya of the Indonesia Power Workers’ Union (PP Indonesia Power) said the planned PLTU holding company was among the state-owned holding companies slated for an initial public offering (IPO).
“We are worried that transferring the assets into a new company and [issuing] an IPO will disrupt the balancing function of the electricity tariffs held by those plants on Java. It will follow the ‘purely business’ rule,” he said.
Andy added that an IPO might hike electricity prices in Java-Bali, as the 11 power plants contributed up to 60 percent of Indonesia’s total power generation.
PP Indonesia Power claimed to have a study on such a potential price hike, but did not present it at Tuesday’s press briefing citing time constraints.
The State-Owned Enterprises (SOEs) Ministry had previously declared a commitment to list 14 state-owned holding companies on the Indonesia Stock Exchange in the next four years. Among them are the geothermal power holding firm headed by PGE and PT Pembangkit Listrik Tenaga Uap (PLTU), about which little was known at the time.
Read also: Let's just keep coal plants, PLN says, banking on carbon capture
The plan to form a coal plant holding company comes after PLN reached almost Rp 500 trillion in long-term debt at the end of 2020, mainly due to the government's 35,000-megawatt power plant development program, which is dominated by coal power. PLN’s high debt is one of the key financial stressors that is preventing the company from modernizing its grid.
The SOEs Ministry plans to provide state capital injection of Rp 8 trillion next year to help PLN develop new power plants.
