Planned rationalization in PLN criticized

State electricity company PT PLN will be forced to lay off 60 percent of of its 55,000 employees after it suffered a huge loss of Rp 11.1 trillion in the first half of this year.

PLN president Kuntoro Mangkusubroto has sent a letter early August to then state minister of investment and state enterprises development Rozy Munir, asking for fresh fund. Otherwise, PLN would be forced to lay off 60 percent of its employees.

However, electricity observer Okky Setiawan said the planned lay off could be avoided, as "there are other alternatives to save PLN."

PLN suffered such a huge loss, mainly from the weakening of the rupiah against the U.S. dollar. PLN finances its operation mainly in U.S. dollar, including to pay private electricity, and gets its revenues in rupiah.

Okky said if PLN was forced to lay off 33,000 of its employees, it could create uneasiness in the society and endanger stability.

Okky called on Kuntoro to consider the timing in the planned rationalization. He acknowledged that Kuntoro was successful in rationalizing tin miner PT Timah when he was Timah president and made the company a profitable venture. But Okky warned that the situation now is a lot different from when Kuntoro was president of Timah.

"If he goes ahead (with the rationalizaiton, we will ask Kuntoro to resign as PLN president director," said Okky, who also heads an organization grouping children of PLN retired employees (LFKP3).

To reduce future losses, Okky said PLN could transfer its power generating and transmission units in non-potential areas (outside Java) to the government, in this case to the Ministry of Finance. (*)