The additional capital would also be used to develop transmissions and ensure the equal distribution of electricity across the population.
Arief Kamaludin|KATADATA

Commission VI on trade, industrial, investment, cooperatives and small and medium scale enterprises at the House of Representatives (DPR) has rejected the request of state power firm PLN for additional state equity participation in the Revised 2016 State Budget. The House felt that the administrative requirements needed to be met and that the State Equity Participation Working Committee needed to look in-depth at this request.

Chair of Commission VI Teguh Juwarno said that they needed more time to discuss this proposed additional state equity participation, particularly given the difference of opinion among the commission’s members. The commission decided to put the capital injection for PLN on hold. (Read: PLN State Capital Injection to Increase from Asset Revaluation Taxes).

“The Commission has asked the Minister of Finance to complete the administrative requirements for requests for additional state equity participation in 2016 in the Revised 2016 State Budget in accordance with the law,” said Teguh, reading the conclusion of the meeting at the DPR building in Jakarta, Monday evening (20/6).

In response to this decision, Finance Minister Bambang Brodjonegoro – representing Minister for State-Owned Enterprises (SOE) Rini Soemarno, who is still banned from attending the House – said that the maximum of additional state equity participation in PLN would be IDR 13 trillion. This means the Commission is permitted to approve a figure lower than this or reject the request for additional funding altogether.

Initially, the government allocated just IDR 10 trillion in state equity participation for PLN in the 2016 State Budget. This increased to IDR 26.3 trillion in the draft Revised 2016 State Budget proposed by the government, which is currently being discussed by the House. (Read: DPR Refuses to Disburse State Funds for BPJS, Land Bank Agency).

Bambang said the additional capital for PLN would not be in the form of cash. The government would transfer tax raised from the revaluation of PLN assets last year for the capital injection. “So it would be as if we had not collected the IDR 13 trillion (tax on the revaluation of assets). The funds would be used to for the additional equity participation,” said Bambang.

PLN plans to use the capital injection to build a gas engine fired based power plant, which is targeted for completion in three to four years. This power plant would help meet the nation's energy demand in 2018.

The additional funds would also be used for other power plant and electricity infrastructure development projects. Bambang said the draft Revised 2016 State Budget only included additional state equity participation for PLN. As a result, the total state equity participation for SOEs increased from IDR 40.42 trillion to IDR 53.98 trillion.

PLN President Director Sofyan Basir expects Commission VI to approve the government's proposal to increase the company’s state equity participation. These non-cash funds would be used to develop electricity networks in remote areas of Indonesia. (Read: Hutama Karya to Build Aceh Toll Road, Requests Additional Capital).

He said the capital injection must be viewed as a long-term investment to increase Indonesia's electrification ratio. “Investment for the development of (the country’s) outermost regions. That's difficult. That's why we will use the state equity participation for that,” he said.

The additional capital would also be used to develop transmissions and ensure the equal distribution of electricity across the population, in particular to for the distribution of electricity of 20 kV or less to people in remote and outermost regions.

In general, Sofyan added, the state equity participation will support the government's energy sovereignty program, increase PLN's annual customer base by 9.69 percent, support the development of electricity infrastructure for the 35,000 MW megaproject, and support the program to increase the nation's electrification ratio.

PLN's Planned Use of State Equity Participation:

Project

Capacity

Project Value

(IDR Trillion)

State Equity Participation

(IDR Trillion)

Distribution

 

15.5

5.6

Transmission, Substation, and Transformers

 

24.2

5

Five Power Plants:

 

 

 

Tanjung Priok Combined Cycle Power Plant

800 MW

9.9

1.5

Muara Karang Combined Cycle Power Plant

500 MW

5.1

0.7

Lombok PeakerbCombined Cycle Power Plant

150 MW

1.6

0.2

Pulau Combined Cycle / Gas Engine Fired and Diesel Fired Power Plants

 

18.6

8.56

Diesel Fired Power Plants across the country

 

2

2

Total

 

76.96

23.56