Annual Report 2002

Contents

Vision, Mission and Motto 02Company Overview 03

Words from the President Commissioner 05Welcoming the Future 09

Control and Management 13

The Pillar of Change 27New Board of Commissioners 27

New Board of Directors 27Asset Re-evaluation 27

Electricity Subsidisation 28The Java-Bali Trade Mechanism 29

The Problem of Private Electricity Providers 30

Future Targets and Strategies 33Targets 33

Strategies 33

Business Achievements from the Year 1998 – 2002 37Business Data 37

Quality and Reliability 41Marketing and Servicing 42

Good Corporate Governance 43Organisational and Human Resources Development 44

Investment Financing 45Information System Development 46

Improvement in Efficiency 47The Empowerment of Society 47

The Environment 49

Legal Action 51Overview of Important Financial Data 55

General Management Discussions 59Introduction 59

Financial Synergy 59Business Prospects 64

Business Risks 64

Statements from the Board of Commissioners and Directors 67

Financial Report 69

Company Values …

In view of the Company’s values, which are: Mutual Trust, Integrity,Care, and Readiness to Learn …

Sensitivity towards customers’ needs … A Continued effort to giveservice, which satisfies customers’ needs quickly, accurately, andappropriately.

Recognition of human dignity and pride… The giving of high es-teem for human dignity and pride with all their strengths and weak-nesses as well as to recognise and protect their rights in the conductof its business.

Integrity … The giving of high esteem for the values of honesty,integrity, and objectivity in the management of its business.

Product Quality … The continuous and measured improvement ofthe quality and reliability of its product as well as the maintenance ofthe quality of the environment in the conduct of its business.

Opportunities for advancement … The giving of equal and exten-sive opportunities for advancement for every member of the com-pany to achieve and hold positions according to the criteria and thelevel of competency established.

Innovations … The readiness to pass knowledge and experience tomembers of the company, encouraging inquisitiveness as well as ac-knowledge ideas and innovations.

Prioritising the company’s interests … Consistent in the preven-tion of the occurrence of conflicting interests and the guarantee thatevery decision made is in line with the company’s interests.

The Shareholders … Business decisions will be directed towards theeffort to increase the value of the shareholders’ investment.

Annual Report 2002 I 01


Electricity fora Better Life


VISIONTo be recognised as a world-class company that grows, expands, su-perior and reliable, focussing on the human potentials.

MISSIONa. To conduct a business that provides electricity and other related

services, oriented towards customer, company member and share-holder satisfaction.

b. To provide electricity as a way to increase the quality of life forsociety.

c. To strive for the provision of electric power as the stimulus foreconomic activity.

d. To conduct an environmentally friendly business.

MOTTOElectricity for a better life


Company Overview


Business Activity Unit 1999 2000 2001 2002Sales GWh 71,332 79,165 84,520 87,089Internal Production GWh 84,776 93,325 101,654 108,360- Holding Company GWh 15,875 16,903 18,802 39,589- Subsidiaries GWh 64,148 66,600 68,832 68,771- Diesel Generation Rental GWh 473 687 720 1,225- Electric Power Purchases GWh 4,279 9,135 13,299 19,067Network Depreciation % 12.22 11.65 13.52 16.54Connected Power MVA 36,215 38,834 41,585 43,666Number of Customers Million Customers 27,524 28,595 29,827 30,953Sales/Customers kWh/Customer 2,592 2,768 2,833 2,813Villages with Electric Power Village 48,435 49,155 49,476 52,007Installed Power MW 20,592 20,762 21,059 21,112Length of Transmission kms 24,389 24,822 25,989 25,989Length of Distribution TM kms 219,610 216,220 220,990 228,104Length of Distribution TR kms 282,921 287,581 297,157 307,226Main Station Capacity MVA 46,784 49,957 50,485 50,485Distribution Station Capacity MVA 25,063 27,551 27,585 27,585

Financial PositionTotal Assets Billion Rp 73,219 78,003 79,906 213,898Net Fixed Assets Billion Rp 51,819 52,641 53,048 185,617Work in Progress Billion Rp 13,481 14,227 12,340 9,587Equity Billion Rp 12,693 18,625 19,198 152,084Long-Term Liabilities Billion Rp 27,727 34,255 32,936 42,968Short-Term Liabilities Billion Rp 29,722 21,887 24,270 14,846Operating Revenue Billion Rp 15,997 22,556 35,359 44,183Operating Profit (Loss) Billion Rp (5,505) (4,659) (3,420) (8,162)Net Profit (Loss) Billion Rp (11,368) (24,611) 180 (6,059)

RatiosRate of Return onNet Average Fixed Asset % (10.66) (8.92) (1.62) (1.71)Operating Ratio % 134.41 120.66 90.33 118.47Debt Equity Ratio %:% 78 : 22 75 : 25 75 : 25 28 : 72Debt Service Coverage Times 0.48 2.46 1.03 2.02Rentability % (18.61) (40.10) 0.90 (5.00)Solvability % 78.46 71.97 71.59 27.03

Human ResourcesNumber of Employees Employees 53,076 50,310 49,637 48,238Energy Sold Per Employee MWh/Employee 1,344 1,574 1,700 1,803.8Customer per Employee Customer/

Employee 519 568 600 641

Annual Report 2002 I 4Annual Report 2002 I 04

Repositioning

Improvement in various aspects to create a new image,which is more efficient, of better quality,

that still prioritises customer satisfaction


Creating“A New PLN”


In line with the program for Restructuring in the Electric Power Sec-tor and since Government Legislation Number 20 of the Year 2002regarding Electric Power has been put into effect, PT PLN (Persero)must immediately organise itself in order to face a changed environ-ment. Competition in the provision of electric power in certain ar-eas, which is a Government Legislation mandate, will be a new phe-nomenon for which PT PLN (Persero) must take a position in order toobtain a strategic role.

This is an inevitable consequence and PT PLN (Persero) as the largestelectric company in Indonesia today must reposition itself, whichinvolves not only a change in structure, policies, and corporate strat-egies, but also a change in company culture. These steps must betaken in order for PT PLN (Persero) to be able to take the first oppor-tunity to obtain the maximum share in the new era for national elec-tric power industry.


Words fromthe PresidentCommissioner

Annual Report I 06

The obligation to meet the public’s needs for electricity, which con-tinually increases within its business area, must be recognized as anopportunity not a burden, such that the ability of the company toaccommodate the requirement for electricity must be improved. Inline with this fact, PT PLN (Persero) must explore every possibilityfor the use of available types of primary energy and these must becompetitive in the generation of electric power, such that the costof fuel, which is the largest component of the cost for electric powergeneration can be continually minimised.

In relation to this, efforts to develop non-petroleum electric powergenerators must continually be made in various areas, whether inmeeting the increasing public need for electricity, or in the programto replace petroleum generators, which are no longer suitable foroperation.

Aside from diversification in the use of primary energy for electricpower generation, improvement in the efficiency of every companyactivity is required, including that which involves capital expendi-ture as well as operational expenditure, such that PT PLN (Persero) isable to provide a more competitive electric power. However, con-tinuous efforts to improve efficiency in order to enhance thecompany’s health must be made within the context of high qualityand reliability in the distribution electric power.

Henceforth, in the plan to boost the company’s image, there aremany aspects related to customer service that can be improved andupgraded, such that there will be an increasing need for the exist-ence PT PLN (Persero), gaining the public’s affection.


Words fromthe PresidentCommissioner

The efficient management of the company, the provision quality andreliable electric power, economically appropriate electricity rates,as well as superior customer service are key factors in creating “ANew PLN”, which at the same time enhances the company’s value.

In relation to this, PT PLN (Persero) must progressively conduct GoodCorporate Governance in the management of the company, for theabove-mentioned reasons, and this may be a form of public account-ability.

Bless us Lord, in our efforts. Amen.

Jakarta, 1st May 2003The President Commissioner

Luluk Sumiarso


The use of computer technology for the service system.

The Use ofAdvanced Technology


Welcomingthe Future


The Era of Recovery … At the passing of a five-year difficult period, at last the timefor redemption is over, and PLN survives and electricity continues to flow, conditionsdoubted by many people, in view of the immense surge experienced by PLN duringthe time of crisis. However, with the faith of the management and all levels of PLN’soperations, along with unwavering efforts, PLN now stands at the end of the darktunnel that widens into light of welcomed hope, seizing opportunities in its stepstowards recovery, a time that has been the yearning of many, a fertile field for alllevels of the PLN operations to take action in self-development, to compete in givingthe best to the company.

Restructuring in the Electric Power Sector … At this moment a restructuring pro-cess in the electric power sector is being carried out, with the implementation ofGovernment Legislation No. 20 of the Year 2002 regarding Electric Power, which isaimed to provide the basis for the implementers of the electric power business inorder to become good, efficient and independent business units that are able to takeup their roles and become competitive nationally as well as globally.

This directs the development of the electric power business closer towards competi-tive markets, which becomes the consequence for the existence of PT PLN (Persero)in the future. In the past the company has been a unit for the development andprovision of electricity for the public, however, today it is further recognised that PTPLN (Persero) is a business unit complete with technology and capital.

As a company laden with technology and capital, PT PLN (Persero) must be given thesupport of the appropriate management, business culture, business strategies, andbusiness plans that are in principle related to Human Resources of employees. There-fore Human Resources is the primary support of the company such that these must beprepared to become professionals in their fields.


Forewords fromthe President Director

Increase in the Basic Rate for Electricity … In the effort to improve the financialcondition of the company, increase in the Basic Rate for Electricity (TDL) cannot beavoided. However, increase in the Basic Rate for Electricity is carried out while stilltaking into account the financial capability of the customers; therefore this increaseis carried out in stages. As the result of the increase in rate, aside from increasingPLN’s revenue, PLN will have to face an inevitable option, which is to accommodatethe public’s requirement to improve service, as the logical consequence for the in-crease in the cost burden that has to be born by the public to acquire electricity inorder to enhance their lives. Also, in line with the increase in the Basic Rate forElectricity, PLN is required to publish a quarterly Service Quality Level Indicator (TMP).

However, it must be acknowledged that within this era increasingly tight businesscompetition, customer service is a requirement that cannot be ignored. The cus-tomer is an important part of the existence and the continuity of the company. There-fore, customer service must be a continuous business strategy for the company andmust still be the a company commitment that cannot be left behind.

Customer Service … In line with the ever increasing standard of living for society,PLN customers are not only concerned with the quality and the availability of theelectric power supply, but they are also concerned with the quality of the serviceprovided in relation to how they are treated as business partners.

The ever-increasing requirement to improve customer service must be met by PLN.Volatility in the supply of electric power by PLN due to disturbances or rotationalpower cuts due to shortage in supply, inaccuracy in meter reading and the negativeattitude of front liners in their interaction with customers are matters that becomethe main topics of complaints from the customers lately. These must be the focus ofconcern by all levels of PLN’s operations in their efforts to improve customer service.

Further, PLN must be sensitive in re-evaluating the business process that is the partof the activity chain, mechanism, and procedures implemented within the process tocarry the product into the customers’ hands, and it must be more accurate in choos-ing the technology used in the activities to improve customer service quality. The useof advanced technology in the interest of customer service must be realised andcontinually developed. Computerisation of the service system seems to be the inevi-table choice.

Good Corporate Governance … Customer service is an important part of the effortto implement the principles of Good Corporate Governance (GCG), which includesfairness, transparency, accountability and responsibility. It is time for PT PLN (Persero)to step forward towards company management based of the principles of GCG, whichspecifies how to operate a company openly and free from political pressures, withclear responsibilities. GCG is not merely a requirement but it is mandatory.


By implanting the principles of GCG in the running of the company, it is expected thatthe company will improve in their communication with stakeholders, it will be able toincrease the trust of its shareholders and investors, as well as able to maintain theexistence and the continuity of the company operations.

The commitment of the Board of Directors of PLN is shown in the General Sharehold-ers’ Meeting of the company’s Subsidiaries, whereby each of the Subsidiary is askedto implement Good Corporate Governance.

It is time for PLN to take off, to step forwards towards a more advanced, modern,and independent PLN, such as the one that we all envision.

Step by step, PLN is moving closer towards that vision …..

Jakarta, April 2003The President Director

Eddie Widiono S.

Forewords fromthe President Director


The Board of Commissioners and Directors are appointed anddismissed by means of a General Shareholders’ Meeting.

Control andManagement Formation


In accordance to the Article of Association of the Company, PLN is operated and run bya Board of Directors, which is appointed and dismissed by means of a General Share-holders’ Meeting (RUPS). The Board of Directors consists of one or more Directorsand is monitored by the Board of Commissioners. The Board of Directors is placed inoffice for a period of 5 (five) years and, without mitigating the rights establishedthrough RUPS, may be dismissed at any time.

The Board of Commissioners is also established through RUPS, and consists of one ormore Commissioners. The period of office for the Board of Commissioners is 3 (three)years, and without mitigating the rights established through RUPS, may be dismissedat any time.

At the date of the compilation of this Financial Report of PLN for the year 2002, thestructure of the Board of Commissioners and Directors of PLN as well as the back-ground of each of the members are as follows:

Control andManagement


Luluk Sumiarso

An Indonesian citizen, holding the position of President Commissioner for PT PLN(Persero) since the year 2002, based on the Decree of the Minister of State OwnedBusinesses, Number: KEP-99/M-MBU/2002, dated 30th May 2002.

Born in Ponogoro on 11th May 1951, the gentleman who enjoys listening to traditionalhybrid music, has a high level of concern for PLN. He hopes that PLN can become abenchmark and a market leader for the business of electric power supply in the coun-try, especially in terms of efficiency and customer service. PLN must be managedwith transparency and responsibility.

A graduate in the field of Electrical Engineering from Institut Teknik Bandung in 1976,with a Post Graduate degree in Instructional Technology from Syracuse UniversityU.S.A in 1979, he also completed a degree in Energy Management and Policy in 1988from the University of Pennsylvania, U.S.A and acquired his Doctorate degree in thesame field in 1990.

His career began at the beginning of the year 1979 as a Sub-department Head in theDirectorate General of Energy, which then became the Directorate General of Elec-tricity and the Utilisation of Energy. From 1990 to 1991, he held the position of Sub-Division Head; then from 1991 to 1992 he was appointed Director of the ElectricityDevelopment Program. For 6 years, from 1992 to 1998, he held the position of Headof the Planning Bureau in the Department of Mining and Energy. In 1998, he returnedto the Directorate General of Electricity and the Utilisation of Energy as the TechnicalDirector for the Electricity department. Since 2001 until this day, he has been en-trusted the position of Director General of Electricity and the Utilisation of Energy.

Aside from the structural position given to him, he was also entrusted to take theposition of Member of the Monitoring Committee/Commissioner in PT Gas Negara(Persero) from 1994 to 2002. Then in 2002 up to this day, he holds the position ofPresident Commissioner for PT PLN (Persero).



Komara Djaja

An Indonesian citizen holding the position of Commissioner for PT PLN (Persero) since2002, based on the Decree of the Minister of State Owned Businesses, Number: KEP-99/M-MBU/2002, dated 30th May 2002.

Born in Jakarta on 11th April 1951, he graduated in Economics from Universitas Indo-nesia in 1979. He completed a post-graduate degree from the University of Birming-ham, U.K. in 1984. In 1992, he acquired a Doctorate degree from Iowa State Univer-sity, U.S.A.

His career began in 1976 as a Research Staff for LPEM-FEUI and in 1978 became alecturer for FEUI, and he still holds both these positions today. From 1992 to 1993, heheld the position of Assistant Director in the Instruction and Training Department,LPEM-FEUI, and from 1993 to 1998, he became the Head of the Bureau of Interna-tional Balance of Payments, BAPPENAS. For 3 years, from 1995 to 1998, he held theposition of Director for LPEM-FEUI.

From 1998 to 1999, he was the Specialist Staff for the Finance Department of theCoordinating Ministry of Economy, Finance, and Industry, and from 1999 to 2001, hebecame an Assistant in the Department of International Cooperation. From the year2001 up to this day, he is entrusted the position of Coordinating Deputy in the Depart-ment of Macro Economy and Finance in the Coordinating Ministry of Economy.



Andung A. Nitimihardja

An Indonesian citizen, holding the position of Commissioner for PT PLN (Persero)since 2002, based on the Decree of the Minister of State Owned Businesses, Number:KEP-99/M-MBU/2002, dated 30th May 2002.

Born in Bandung on 4th April 1950, this hard working gentleman spends much of hiscareer in business development studies in private or BUMN sector.

He graduated from Institut Pertanian Bogor in 1975. He completed his Master’s de-gree in Public and International Affairs (MPIA) from the University of Pittsburgh,U.S.A in 1982. From the same university, he also acquired a Doctorate degree inDevelopment Studies in 1986.

His career began in 1981 as the Head of the Farming and Mining Department in theOffice of the Investment Coordination Body (BKPM). His term of office as the Head ofthe Department of Information and Development for State Owned Businesses (BUMN)in the State Finance Department ended in 1992; from 1992 to 1993, he held theposition of Director of Industrial Companies – the Directorate General of Develop-ment for BUMN from 1992-1996, the State Department of Finance. From 1996 to2000, he returned to the BKPM office and from 1999-2000, he was entrusted to holdthe position of Deputy for License of BKPM. Then he was entrusted the position ofDeputy Minister/Deputy Head of Investment and Development of BUMN in the De-partment of the Development of National Businesses in the Office of the State Minis-ter of Investment and the Development of BUMN. Formerly, he holds a position ofExpert Staff of BUMN minister in Investment and Local Autonomy. Aside from thestructural position he has held since 1991, he has been a member on the Boards ofCommissioners in various BUMN, such as PTP XII, PTP XXIV-XXV, PT Tambang BatuBara Bukit Asam. From 1996 to 1999, he was even given the position of PresidentCommissioner in PTP Nusantara II, and in the year of 1999-2002, he holds the posi-tion of Commissioner in PT PLN (Persero) and President Commissioner in PT RajawaliNusantara Indonesia. Previously, he elected as Commissioner in PT Dirgantara Indo-nesia (PT.DI).



Yogo Pratomo

An Indonesian citizen, holding the position of Commissioner for PT PLN (Persero)from the year 2002, based on the Decree of the Minister of State Owned Businesses,Number: KEP-99/M-MBU/2002, dated 30th May 2002.

Born in Jakarta on 10th May 1957, the quiet gentleman began his career in the Direc-torate General of Electricity and Energy Development and in the Secretariat Generalof the Department of Energy and Mineral Resources. He has followed many trainingcourses and attended workshops within and outside the country in the field of Elec-tricity. He is a graduate of Electrical Engineering from Institut Teknologi Bandung in1981. He completed a post-graduate degree in Energy Economics from the Universityof Wisconsin – Madison in 1984, and 4 years later, to be exact in 1988, he completedhis PhD in the same subject from the same university.

He started his career in 1990 as the Section Head for the Directorate General ofElectricity and Energy Development (1990-1992); he was Sub-Division Head for theDirectorate General of Electricity and Energy Development (1992-1998); Director ofthe Development Program for Electric Power and Energy Development (1995-1998);Head of the Bureau of Planning for the Secretariat General of the Department ofMining and Energy (1998-1999), a Specialist Staff for the Minister of Mining andEnergy in the Department Electricity, the Secretariat General of the State Depart-ment of Energy and Mineral Resources (1999-2001); a Specialist Staff for the Minis-ter of Energy and Mineral Resources in the Department of Information and Communi-cations, the Secretariat General of the State Department of Energy and Mineral Re-sources (2001-to date). Then in 2002 up to this day, he holds the position of Commis-sioner for PT PLN (Persero).



Mohamad Ikhsan

An Indonesian citizen, holding the position of Independent Commissioner for PT PLN(Persero) from the year 2002, based on the Decree of the Minister of State OwnedBusinesses, Number: KEP-99/M-MBU/2002, dated 30th May 2002.

Born in Sigli, Aceh on 7th November 1964, this young and energetic gentleman spendsmuch of his career in education as a lecturer in the Economic Faculty of UniversitasIndonesia, from 1987 up to this day.

Aside from being a lecturer, his main occupation is as a researcher in LPEM-UI, andbecame a Deputy Head in the department of Economic Research and Policies between1999 and 2001.

He is an economic graduate from Universitas Indonesia in 1988, and graduated asMaster of Arts in Economics from Vanderbilt University, U.S.A. in 1991, then gradu-ated as PhD in Economics from the University of Illinois, U.S.A. in 1998.

He began his career in 1987 as a lecturer in the Economic Faculty of UniversitasIndonesia; a lecturer for the FEUI Extension Program (1989-to date), a lecturer in theUniversity of Indonesia Business School (1999-to date), and a lecturer for a Master’sProgram in Public planning and Policies (MPKP UI) from 1999 to this day. He is alsoactive as a lecturer in Lemhanas (National Institute of Defence) and a member of theIndonesian Maritime Committee. From December 2001. He became the Head of LPEM-UI.

Then in the year 2002 up to this day, he holds the position of Independent Commis-sioner for PT PLN (Persero).



Eddie Widiono Suwondho

This friendly gentleman was born in Malang, East Java, on 15th May 1953 and has heldthe position of President Director for PT PLN (Persero) from the year 2001, based onthe Decree of the State Minister of Finance of the Republic of Indonesia, Number:108/KMK.05/2001, dated 2nd March 2001. He has then been appointed for the secondtime as the President Director based on the Decree of the Minister of State OwnedBusinesses, Number KEP-180/M-MBU/2003, dated 6th March 2003.

As the number one man in PT PLN (Persero), his place of career since 1977, hecontinues to focus on giving the best service, employee and corporate satisfaction aswell as meeting the expectations of the shareholders.

An Electrical Engineering Graduate from Institut Teknologi Bandung in 1976, he com-pleted a graduate program (MSc) in Systems Control from the University of London in1989. He then completed a postgraduate degree in International Management fromST Manajemen Prasetya Mulia (MM) in 1994.

His career began as the Head of the Unit for Operations and Network Logistics in theDirectorate of Businesses (1990-1995), then he became the Director of Developmentand Trade for PT PLN PJB I (1995-1998), and Director of Marketing and Distributionfor PT PLN (Persero) in 1998 to 2001. Then in 2001 up to this day, he holds theposition of President Director of PT PLN (Persero).



F. Parno Isworo

This tall gentleman was born in Solo, Central Java, on 15th July 1952. He has held theposition of Finance Director since 1988 based on the Decree of the State Minister ofthe Utilisation of BUMN of the Republic of Indonesia, Number: Kep-33/M-PBUMN/1998, dated 31st July 1998. He has then been a appointed as the Finance Director forthe second time based on the Decree of the Minister of State Owned Businesses,Number: KEP-180/M-MBU/2003, dated 6th March 2003.

As a person of experience in the finance department, he admits that the financialcondition of PLN has been improving especially since the implementation of the pro-gressive increase of the Basic Rate for Electricity (TDL) since the year 2000. As atoken of appreciation to its customers, it is time that PLN begins to make invest-ment again to enhance customer service.

He graduated in Electrical Engineering from Institut Teknologi Bandung in 1977, andcompleted a post-graduate program in Business Management (MBA) from MonashUniversity in 2001. In the same year, he also completed a post-graduate program inother subjects (MM) from IPMI.

His career began in 1987 in the PLN Head Office, where he started as the Head ofProject I, the Unit of Project Administration (1982-1987), then became the Head ofthe Unit for Project Reports in the Directorate of Development (1987-1992), andHead of the Funding Planning Unit in the Directorate of Finance (1992-1995), then asHead of the Funding Division in the Directorate of Finance (1995-1998). Finally, hehas held the position of Finance Director for PT PLN (Persero) from 1998 to this day.



Ali Herman Ibrahim

This tall gentleman was born in Palembang on 23rd September 1954 and holds theposition of Director of Generators and Energy based on the Decree of the Minister ofState Owned Businesses, Number: KEP-180/M-MBU/2003, dated 6th March 2003.

The position he holds is a new position for him, however with a high level of self-confidence, he will be ready to hold the position that has been entrusted to him.There are tough challenges in the future, especially in areas where there is a crisis inthe supply of electricity. This simple and quiet gentleman is planning short-term andlong-term strategies to face the tough challenges especially in terms of the electric-ity supply crisis in PLN units outside Java.He graduated in Electrical Engineering from Institut Teknologi Bandung in 1978, andcompleted a post-graduate program in other managerial fields (MM), from PPM in1997.

His career began as the Head of the Technical Department for the Electricity Projectsof West Sumatra and Riau in 1983, then became the Head of the Electricity Projectsfor West Nusa Tenggara (1985-1987), and Head of the Construction Operations in theConstruction Department (1987-1992), then as Head of the Tangerang Branch (1992-1996), as Head Deputy in the Business Development Department in the DistributionArea of Greater Jakarta and Tangerang (1996-1997), as Technical Assistant of Mar-keting in PT PLN PJB I (1997-2000), as Head of PT PLN (Persero) in the Special Regionof Batam (2000-2003), and since 6th March 2003 has been entrusted the position ofDirector of Generators and Energy up to this day.



Herman Darnel Ibrahim

This tall, well-built gentleman was born in Payakumbuh on 15th April 1954, and holdsthe position of Director of Transmissions and Distributions based on the Decree ofthe Minister of State Owned Businesses, Number Kep-180/M-MBU/2003, dated 6th

March 2003.

This position is not new to him. Previously for almost 7 years, he held a position asthe Director of Development and Trade and Director of Human Resources for PT Indo-nesia Power. This man of high principles has prepared a number of programs to facethe challenges in the department of Transmissions and Distributions, such as givingpriority to improving the Tension Quality of the repairs for SAIDI, SAIFI, and sup-pressing the Technical Depreciation of the Transmission and Distribution Networks.

He graduated in Electrical Engineering from ITB in 1979, and completed a post-gradu-ate program in Power System Analysis (MSc) from UMIST, Manchester in 1988.

He began his career as a Design Staff for the Central Transmission Relay Station andas Design Staff for Distribution in the Network Design Unit for the PLN Head Office(1979-1984), then became the Section Head for Protection and Telecommunication inthe Sub-Division of Network Distribution in the PLN Head Office (1984-1986), and asHead of General Planning for PLN P2B throughout Java and Bali (1986-1987), as Headof the Unit for Load Control in South Sumatra (1987-1990). As Head of the TanjungKarang Branch of PLN (1990), as the Deputy Head of PLN Business Development inRegion IV (1991-1994), as the Deputy Head of Planning for PLN in the East JavaDistribution areas (1994-1996), as the Manager of Corporate Planning in PT PLN PJB I(1996-1998), as the Director of Development and Trade (1998-2000) and the Directorof Human Resources (2000-2003). Then from 6th March 2003, he has been entrustedthe position of Director of Transmissions and Distributions up to this day.



Sunggu Anwar Aritonang

This tall gentleman was born in Sibolga on 4th May 1950, and holds the position ofDirector of Trade and Customer Service based on the Decree of the Minister of StateOwned Businesses, Number: KEP-180/M-MBU/2003, dated 6th March 2003.

This is a new position for him. His previous position was related to the developmentof Information and Technology, such that in his mind he continuously thinks of thedevelopment of advanced technology especially in computers. This energetic man willconcentrate on customer service. “There has to be a change in the way of thinkingwhen serving the customers,” remarked the man who has been spending his career inthe PLN Head Office.

He graduated in Electrical Engineering, Institut Teknologi Bandung in 1975. His careerbegan as the Head of Consultancy Service Department in the PLN Head Office (1982-1990), then he became the Head of the Unit for the Directorate of Planning (1990-1995), then as the Division Head for Information Systems and Analysis and Evaluationfor the Directorate of Planning (1995-2001), as the Primary Specialist in Madya II forBusiness Development for 4 months in 2001, and continued to hold the position ofPrimary Specialist in PT PLN (Persero) Head Office (2001-2003). Then from 6th March2003, he has been entrusted the position of the Director of Trade and CustomerService up to this day.



Ir. EDDIE WIDIONO SUWONDHO, M.Sc. MM

Sosok pria yang murah senyum ini yang dilahirkan di Malang, Jawa Timur padatanggal 15 Mei 1953 ini, telah menjabat sebagai Direktur Utama PT PLN(Persero) sejak tahun 2001 berdasarkan Keputusan Menteri Negara KeuanganRepublik Indonesia Nomor : 108/KMK.05/2001 tanggal 2 Maret 2001. Yangkemudian untuk keduakali diangkat sebagai Direktur Utama berdasarkanKeputusan Menteri Badan Usaha Milik Negara Nomor : KEP-180/M-MBU/2003, tanggal 6 Maret 2003.

Sebagai orang nomor satu di PT PLN (Persero) tempatnya berkarir sejak tahun 1977ini senantiasa menekankan pada pelayanan yang terbaik, kepuasan pegawaidan korporat serta memenuhi ekspektasi shareholder.

Lulus Sarjana Teknik Elektro, Institut Teknologi Bandung, tahun 1976, Lulus PascaSarjana Sistem Kontrol, University London (MSc), tahun 1989. Lulus PascaSarjana Manajemen Internasional ST Manajemen Prasetya Mulia (MM) tahun1994.

Karir jabatannya dititinya dalam waktu 11 tahun untuk mencapai puncak jabatan diPT PLN (Persero) ini, berawal sebagai Kepala Dinas Operasi dan LogistikJaringan Direktorat Pengusahaan (1990 – 1995), Direktur Pengembangandan Niaga PT PLN PJB I ( 1995 – 1998), Direktur Pemasaran dan DistribusiPT PLN (Persero) pada tahun 1998 – 2001. Kemudian pada tahun 2001 –sekarang menjabat sebagai Direktur Utama PT PLN (Persero).

Ir. F. PARNO ISWORO, MBA. MM

Sosok pria bertubuh tinggi ini, dilahirkan di Solo, Jawa Tengah pada tanggal 15 Juli1952 ini, telah menjabat sebagai Direktur Keuangan PT PLN (Persero) sejaktahun 1998 berdasarkan Keputusan Menteri Negara Pendayagunaan BUMNRepublik Indonesia Nomor : Kep-033/M-PBUMN/1998, tanggal 31 Juli 1998.Yang kemudian untuk keduakalinya diangkat sebagai Direktur Keuanganberdasarkan Keputusan Menteri Badan Usaha Milik Negara Nomor : KEP-180/M-MBU/2003, tanggal 6 Maret 2003.



The procedure for the progressive dismissal andappointment of the board of directors

The Succession ofLeaders


The Pillar of Change

A New Board of Commissioners … On 30th May 2002, the Minister of State OwnedBusinesses of the Republic of Indonesia, by means of a General Shareholders Meetingof Perseroan (Persero) PT Perusahaan Listrik Negara (PLN), based on GovernmentRegulation No. 89 of the Year 2000 and Government Regulation Number 64 of the Year2001, issued the Decree No. KEP-99/M-MBU/2002, which establishes the dismissaland appointment of the following members of the Board of Commissioners of PT PLN(Persero):

• The honourable dismissal of:1. Mr. Endro Utomo Notosudiryo from his position as the President Commissioner2. Mr. Ermansyah Jamin from his position as Commissioner3. Mr. Bambang Bintoro Soedjito from his position as Commissioner4. Mr. Martiono Hadianto from his position as Commissioner5. Mr. Sofyan A. Djalil from his position as Commissioner

• The appointment of:1. Mr. Luluk Sumiarso - as President Commissioner2. Mr. Yogo Pratomo - as Commissioner3. Mr. Komara Djaja - as Commissioner4. Mr. Andung A.Nitimiharja - as Commissioner5. Mr. Mohamad Ikhsan - as Independent Commissioner

A New Board of Directors … On 6th March 2003, by means of the Decree No. KEP-180/M-MBU/2003, the Minister of State Owned Businesses of the Republic of Indonesia,also established the dismissal and the appointment of the following members of theBoard of Directors of PT PLN (Persero):

• The honourable dismissal of:1. Mr. Eddie Widhiono Suwondho from his position as President Director2. Mr. Hardiv Harris Situmeang from his position as the Director of Planning3. Mr. Tunggono from his position as the Director of Marketing and Distribution4. Mr. Bambang Hermiyanto Priyadi from his position as the Director of Operations5. Mr. Parno Isworo from his position as the Director of Finance6. Mr. Azwani Sjech Umar from his position as the Director of Human Resources

and Organisations

• The appointment of:1. Mr. Eddie Widhiono Suwondho - as President Director2. Mr. Ali Herman Ibrahim - as Director of Generators and Primary Energy3. Mr. Parno Isworo - as Director of Finance4. Mr. Sunggu Anwar Aritonang - as Director of Trade and Customer Service5. Mr. Herman Darnel Ibrahim - as Director of Transmission and Distribution6. Mr. Djuanda Nugraha Ibrahim - as Director of Human Resources and OrganisationsThe handing over of positions was carried out on 10th March 2003.

Asset Re-evaluation … Two important factors become the basis of the decision madeby the Management of PLN to re-evaluate assets, which are: 1) the large depreciationvalue of the rupiah against other foreign currencies during the monetary crisis, and2) the fact that foreign currencies are major components in the value of the totalassets that belong to PLN.



These two factors result in certain values in the PLN account books becoming verysmall (understated), for example asset values and depreciation cost, such that theresulting report becomes uninformative. The solution to this condition is to re-evalu-ate assets by recalculating the normal value of the assets that belong to PLN and byentering the results into the account books.The benefits of asset re-evaluation for PLN are:

• Accumulated depreciation cost that is sufficient to exchange aged fixed assetswith those of the same capacity.

• It provides the right signal to the consumers and producers regarding the correctbasic cost of production for electricity.

• It provides a basis for the calculation of the level of economic rate.• It prepares the implementation of competitive markets in the electricity sector to

meet the requirement of Government Legislation No. 20 of the Year 2002 regard-ing Electricity.

From the recalculation, the fixed asset value for PLN’s operations as per 1st January2002 increased from Rp 65,388.4 Billion to Rp 195,205.2 Billion (an increase by 3times) and the debt ratio decreased from 70% to 30%. From the asset re-evaluation,PLN is obliged to pay the difference in the PPh tax value of the fixed asset amountingto Rp 137,719.2 Billion, whereby Rp 1.3 Trillion was paid in 2002, and the remainingamount will be paid gradually within a five-year period based on the Decrees of theDirector General of Taxation, Numbers KEP37/PJ.42/2003, KEP38/PJ.42/2003 andKEP39/PJ.42/2003.

Electricity Subsidisation … In 2002, the company received subsidy for electricityfrom the Government amounting to Rp 4,739.1 Billion, which consists of the sub-sidy for electricity budgeted within the State Budget (APBN) for 2002, amounting toRp 3,206.1 Billion, and the subsidy balance from 2001, amounting to Rp 1,533.0Billion.

The use of the subsidy balance for 2001, amounting to Rp 1,230.8 Billion, will bedetermined after the completion of the audit for electricity subsidy.

In the APBN of the year 2003, Rp 4,519 Billion is allocated for electricity subsidy,directed at customers with installed power of <450 VA, and a maximum consumptionof 60 kWh of electricity. Therefore, within the scenario for the increase in rates, thisgroup of customers, which make up 70% of PLN’s customers, will still be subsidised inthe form of a lower electricity rate.

Increase in the Basic Rate of Electricity (TDL) … The depreciation of the Rupiahagainst the US$, which occurred from mid 1997, created a heavy burden for PLN. Oneof the major problems created by the Rupiah depreciation was the increase in thecost for electric power supply, since a large portion of the cost was in other foreigncurrencies. The cost to supply electric power became much higher than the sellingprice or the rate that the public could afford. At the same time, the public’s purchas-ing ability was impeded by the long economic crisis.

The Government’s ability to give subsidy, on the other hand, became increasinglylimited. Therefore, in the plan towards independence and in the effort to maintain


the continuity of the supply of electric power by PLN in the cities as well as thevillages, in addition to the effort to stimulate economic activities, from July 1st,2001, the Government put into effect a new rate for the electricity supplied by PLN.The decision for the new rate is established within the Decree of the President of theRepublic of Indonesia (Keppres), No. 83 of the Year 2001, dated 30th June 2001.

As the continuation of the program to gradually increase the Basic Rate of Electricitytowards a rate level that is in line with the targeted healthy market economy in 2005,which reflects fairness and encourages electricity use for productive activities, on31st December 2001, the Government published the Presidential Decree, Number 133of the Year 2001, which establishes quarterly gradual increase in the Sales Price ofthe Electricity supplied by PT PLN (Persero), expressed in the Basic Rate of Electricityfor 2002 (TDL 2002), and became effective from 1st January 2001.

With the application of TDL 2002, the actual average sales price for the electricitysupplied by PLN throughout Indonesia increased from Rp 334.20/kWh in 2001 toRp 446.62/kWh in 2002, the equivalent of 37.5% increase. This average sales priceis still lower than the average total cost for the supply of electricity for the year,which amounted to Rp 533.85/kWh.

With TDL 2002, it is projected that PLN’s revenue will increase by Rp 5.4 Trillion orthe equivalent of 16 % in comparison to an unchanged rate.Increases in TDL for 2001 and 2002, were not aimed at meeting the whole of theproduction cost of electricity for PLN, but they were aimed at:

• Maintaining electricity supply up to the end of 2002; “to keep the lights on”

• Overcoming the limitation on subsidy funds through a restructuring of subsidies asit is mandated by the People’s Representatives Committee (DPR)

The Java-Bali Trade Mechanism … In line with the Government’s policy to restruc-ture the electric power sector, and in the plan to prepare the company to face themarket mechanism for electricity, PLN is working together with consultants fromPrice Waterhouse and Cooper’s to carry out a Corporate Restructuring, which is aimedat preparing PLN’s organisation and its trade mechanism to face a Single Buyer Mar-ket system.

During the training process, before entering the real Single Buyer Market mecha-nism, PLN has implemented the market system internally for the Java-Bali systemsince mid 2000, with the creation of competition for generators in terms of variablecost only.

In this case, the PLN Head Office acts as a Single Buyer for all the energy generatedby Generators owned by Subsidiaries as well as the Private Sector (IPP-IndependentPower Producers), based on contracts (PPA-Power Purchase Agreements) made foreach generator unit.

PP Agreements with Subsidiaries are made on an annual basis, while PP Agreementswith IP Producers are long-term contracts based on the results of renegotiations.



Distribution Business Unit and Load Control Centre for Java-Bali (PLN UBS P3B) carryout bidding, settlement, the implementation of an operator system and transmissionmanagement, while PLN UB Distribution purchases electricity from a Single Buyer andprovides distribution channels and services.

The two Business Units carry out their activities based on work contracts with thePLN Head Office in the form of a transfer price.

Internally, PLN has also established the required regulations for the implementationof the Single Buyer Market Mechanism, such as the grid code, bidding rules andsettlements.

In organising the competition for generators in 2001, all hydro-powered generators,private generators, geothermal and thermal-fuelled generators are not included withinTOP contracts as competitors, hence from the total installed capacity of 18.6 GW(including private generators), the capacity of competing generators makes up 46%of the installed capacity, producing 43% of the energy.

The Problem of Private Electricity Providers … Finding the solution to the problemof private electricity providers is very important for PLN, since the purchase price ofelectricity from private providers directly affects the operational cost of PLN.

To assist PLN in finding the solution to this complex problem, the Government formeda Restructuring and Rehabilitation Team for PLN, the latest of which was formedbased on the Presidential Decree No. 133 of the Year 2000. In the process to find thesolution to this problem, PLN acts as a negotiator.

The Government Policy for the solution of the problem of private providers of elec-tricity involves a commercial approach, with the principle of obtaining an out of courtsettlement. PLN follows the policy established by the Government with the followingunderstanding:

• Private Electricity Projects involve a number of parties, such as Export Credit Agen-cies (members of the donor countries that make up the Paris Club), Political Insur-ance Agencies (such as Hermes, MIGA, IFC, OPIC), and Sponsor Companies.

• In the plan to support investment in Indonesia, a good relationship with the aboveagencies must be maintained.

• The efforts to maintain the relationship is made through renegotiations and as faras possible legal disputes are avoided.

• The commercial approach taken will not waive any criminal law proceedings involv-ing Corruption, Collusion, and Nepotism (KKN), on the basis that there is evidencefound by the authorities.

Contract renegotiations for private electricity providers include amendments of long-term agreements and the settlement of PLN’s debt for the shortage in the paymentfor the purchase of electricity or geothermal energy production that is already in



operation. Up to the end of the year 2002, the renegotiation process with privateelectricity providers for Power Purchase Agreements and Energy Sales Contracts hasachieved the following results:

• Long-term agreements made with 13 providers.

• Contracts are ended for 6 providers.

• Renegotiations still in progress with 7 providers.

• Litigation with 1 provider.

Contract renegotiations with private electricity providers in 2002 resulted in an in-credible profit amounting to Rp 2,333.0 Billion, which in turn was the result of theelimination of part of PLN’s debt due to a lower, decreasing, negotiated electricitysales price in comparison to the original contract price, such that the total amount ofdebt for the company decreased. In addition, there was an accumulated long-termsavings, which resulted from the renegotiations with the private electricity suppli-ers, amounting to USD 6.2 Billion (NPV, 10% Discount Rate for the term of the con-tract), which in turn was the result of a decrease in the purchase price of electricityfrom the original contract rate. With the above agreements reached, the savingsachieved out of the obligations specified in the contracts, amounted to at least around26% (NPV, 10% Discount Rate for the term of the contract).



Ensuring the achievement of the company’s targets by preparingstrategies as well as taking into consideration various developments

in order to create a company image that carries the principle ofGood Corporate Governance

The Strategy toAchieve Targets


Future Targetsand Strategies

Targets … After passing a difficult period, and looking at the conditions objectively,the internal and the external situations affecting the company, especially with a lim-ited ability to supply electricity, limited source of funds for investment and the appli-cation of Government Legislation No.20 of the Year 2002 regarding Electricity, whichplaces the electric power supply business in a competitive market environment, thecompany’s targets for the future are:

• The achievement of a national electricity rate that is in line with its economicvalue, giving a rate of return of 8% in the year 2005.

• The maintenance of the minimum level of electric power supply reserve for Java-Bali and solutions for other critical areas outside Java-Bali.

• To place the company as a market leader in changing the business environment.

Strategies … The strategies used by the company to achieve the above targets arethe same as the strategies, which have been implemented so far and by using theprinciples of Good Corporate Governance in the effort to move towards good Com-pany Management Organisation in line with the Best Organisational Practice Interna-tionally.

Financial Restructuring … This is carried out to reduce the financial burden and totake the company towards a more commercial orientation.

• A gradual increase in rates is carried out until its economic value is reached in2005, including the application of non-uniformed rates.

• Government subsidy is proposed for certain groups of consumers in order to main-tain the supply of electricity to the public for as long as the average sales price forelectricity is still below the cost of its production.

• Asset re-evaluation is conducted for the year 2002.

Corporate Restructuring … This is carried out to support the company’s recovery andto anticipate changes in the business environment in relation to restructuring in theelectricity sector. The focus is on the decentralisation and empowerment of the units.

Corporate restructuring is carried out through the development of the program ofGood Corporate Governance, especially in matters relating to accountability, man-ageability, and organisational efficiency.

Renegotiations of Special Contracts … Renegotiations are carried out by means ofthe following programs:

• A rescheduling of the operations of private electricity providers in line with thedeveloping needs of PLN’s electric power system, where private electricity provid-ers are situated.

• A decrease in the price by taking into account the development of internationalmarket prices.

• Improvement in the contracts’ terms and conditions to reach a balance betweenthe interest of the buyer and the interest of the seller.

• Renegotiations by means of a commercial approach as well as showing mutualrespect and reaching an agreement for a publicly more acceptable and affordableelectricity price.


Future Targets andStrategies

• Contract renegotiations are carried out, taking into account the following possi-bilities:

- Transfer of ownership (buy-out), in full or in parts.- Contract cancellations with or without compensation.- Joint ventures.- Joint operations.- Relocation of projects to areas that require them most.- A combination of any of the above possibilities.

Increase in Efficiency … This is to ensure that all the strength of the resources ofthe company is utilised to increase income and curb costs.

Increase in efficiency is carried out through the programs to decrease network depre-ciation, increase efficiency in investment (CAPEX, capital expenditure), improve themaintenance system, increase the efficiency of production for generators by curbingthe consumption of generator fuels/SFC, decrease supply level and the billing cycle.

The Development of Electric Power Facilities … In the short run, in order to reducethe peak load of the system, consumers are encouraged to use energy efficientlythrough the demand side management program (DSM), while industrial consumersare encouraged to shift electricity use from peak load time (WBP) to low load time(LWBP). The effort to increase electricity supply is carried out through the repair ofgenerators, the relocation of generators and the rental of generators as well as thepurchase of electric power from captive providers.

Strengthening the Company’s Image … This is an important strategy, which is car-ried out by:

• Increasing shareholder value by increasing the company’s efficiency and the prac-tice of Good Corporate Governance.

• Increasing customer value through transparency in quality and reliable service,gradual modernisation in the provision of service in line with the best practiceapplied by modern electricity companies, empowerment of the consumer public inorder for them to be able to understand more about the electricity business, andthe implementation of community development for the communities around PLN’sprimary installations.

Primary Energy … The purchase of primary energy is a major expenses for the com-pany, such that in order to strengthen the company’s position in the long run, thecompany must use the following strategies:• Geothermal power – Joint ventures in the development of geothermal power with

other related parties.

• Natural gas – Encouraging the development of natural gas sources and the trans-mission of natural gas for PLN generator centres.

• Coal – Ensuring good quality and continued supply and entry into primary industry.

• Hydro-power – Continuing and re-evaluating the result of the past studies on hy-dro-electric power to be developed by PLN itself or in a joint venture with privateinvestors and other partners.


Good Corporate Governance … PT PLN (Persero) is moving towards a good CompanyManagement Organisation based on the principles of Good Corporate Governance(GCG) in line with the Best Practices Internationally, which is one of the managerialaspects of a company that has been used as reference for many practitioners ofbusinesses, financial institutions and world government institutions in binding a re-lationship. GCG has become a conditional factor in the relationship between theCompany and the investors/shareholders, and between the Debitor and its Creditor.

The scope of its implementation in PLN aims at achieving the applied standard or thebest-applied practices, which includes:

• The obligation to implement GCG consistently.

• The organisation of the management and work units of the company that involvethe shareholders, boards of commissioners and directors, the nomination process,the decision process, evaluation of synergy, the remuneration system, etc.

• The organisation of the supporting management and work units, along with therelated committees, such as the Company’s Secretariat and the Audit Committee.

• The coordination of Vision, Mission, work culture and the ongoing practices.

• The systems for reporting, accountability and monitoring.

• The systems for planning and budgeting.

• The financial system.

• The risk management system.

• The systems of industrial relationship and employment policies.

• The supply and logistics systems.

• Relationship with stakeholders.

• Consumers, suppliers, competitors, the public, etc.

GCG implementation in PLN is at the following stage:

• Assessment, which involves the identification and evaluation of the present prac-tices in order to assess the presence of any gaps between the actual practices andthe targeted standard or best practices.

• The required steps are taken to reduce or eliminate the gaps in order to implementGCG effectively.

• Written guidelines are made for GCG, which is better known as the Code of Con-duct/Code for Good Corporate Governance.

• The compilation of the framework for the implementation of GCG.

• The implementation of GCG as a gradual process.

PLN has taken the following steps:

• Introduce/diffuse information on GCG to all levels of the PLN organisation throughcompany meetings and lectures.

• As a Pilot Project, the Board of Directors of PLN through the General Shareholders’Meeting has instructed the subsidiaries of PLN to implement GCG and so far, PTIndonesia Power and PT PJB have shown sufficient progress.

• PLN has appointed AAJ Associates as a consultant to assist in the implementationof GCG in PLN.

Future Targets andStrategies


The effort to improve quality and reliability as well as all theirsupporting factors in order to meet the needs of the consumers of

electricity, which increase every year.

Quality andReliability


Production and Purchase of Electric Power … The growth in the need for electricityis shown in the demand for electricity throughout all the regions in Indonesia, whichhas the tendency to increase from year to year, in line with the improvement in theliving standards of the people, and the development and growth of industries inIndonesia. However, the growth in the need for resources cannot be fully met by PLNdue to a limitation in funds for investment. As a result, several electricity systemsoutside of Java-Bali experience shortages in the supply of resources at the end of2002.

Although not all of the public’s demand has been met by PLN, the growth in produc-tion for PLN increases annually in line with the rate of growth in the demand from thepublic. In addition to the supply produced by PLN’s own Electric Power Generators,PLN also rents Diesel Generators and purchases electricity from private providers.The production and purchases of electricity for the past 5 years are as follows:

BusinessAchievements fromthe Year 1998-2002

Table 1: Production and Purchases (GWh)

Year1998 1999 2000 2001 2002

Own ProductionOil Fuel 13,977 14,747 17,561 19,225 24,198Non-Oil Fuel- Hydro-Power 9,649 9,370 9,110 10,651 8,834- Coal 22,436 25,368 28,776 29,330 29,313- Geothermal 2,616 2,728 2,649 2,982 3,187- Natural Gas 25,743 27,810 25,408 25,447 22,538Electric Power Purchases 3,482 4,279 9,135 13,299 19,067Generator Rental - 473 687 720 1,225Total Own Production,Purchases and Generator Rental 77,903 84,776 93,325 101,654 108,360

The composition for the consumption of energy for production for the past 5 years isspecified in the following table.

Table 2: Consumption Composition of Energy (%)

Year1998 1999 2000 2001 2002

Oil Fuel 18.8 18.4 21.0 21.9 27.5Non Oil Fuel- Hydro-Power 13.0 11.7 10.9 12.1 10.0- Coal 30.2 31.7 34.5 33.5 33.3- Geothermal 3.5 3.4 3.2 3.4 3.6- Natural gas 34.6 34.8 30.4 29.1 25.6Total 100.0 100.0 100.0 100.0 100.0

Energy Composition for the Year 2002

Geothermal

Natural gas

Coal

Hydro-Power

Oil Fuel

33.3%

27.5%

25.6%

10%

3.6%


Sales and Sales Composition of Electricity … The level of growth and electricitysales composition for the past 5 years, are shown in table 3 and table 4.

Table 3: The Growth in the Sale of Electric Power (GWh)

Year1998 1999 2000 2001 2002

Sales (GWh) 65,261 71,332 79,165 84,520 87,089Growth (GWh) 949 6,071 7,833 5,355 2,569Growth (%) 1.5 9.3 11.0 6.7 3.9

Table 4: The Sales Composition for Electric Power (GWh)

YearRate Group 1998 1999 2000 2001 2002

Households 24,866 26,884 30,564 33,340 33,994Businesses 8,667 9,330 10,576 11,395 11,845Industries 27,985 31,338 34,013 35,593 36,831General 3,743 3,780 4,012 4,192 4,419Total 65,261 71,332 79,165 84,520 87,089

From the above tables, it can be seen that after the crisis of 1997, the sales ofelectricity increases sharply in line with the growth in the public’s demand for elec-tricity. However in the years 2001 and 2002, the rate of growth decreased since atthe time the company could not meet the growth in the public’s demand for electric-ity, which is in line with the growth of the GDP. The limiting factor for the growth insales is the limitation in the supply capacity of generators, especially during peakload (WBP). Even outside of Java-Bali, the company was only able increase growth tomeet the natural growth in demand, which is 3 – 4 % per annum.

One of the steps taken by the company to increase sales is by implementing theIntegrated Resources Planning Program (IRP) in order to ensure that the maximumload is not exceeded and at the same time the load factor system is improved.

Integrated Resources Planning (IRP) … This is a plan to reduce the imbalance be-tween the generators’ capability and the load demand, which consists of the follow-ing programs:

• Demand Side Management (DSM), is a program to reduce or shift peak load throughan energy conversion mechanism, whereby the public is encouraged to save energyby using energy saving lamps and the rate mechanism used is aimed at encourag-ing industrial consumers and large commercial businesses to shift from Peak LoadTime (WBP) to Non-Peak Load Time (LWBP).

• Supply Side Management (SSM), is a program to buy electricity from captive pro-viders, which is carried out mainly in order to increase the supply capacity for peakload time by controlling the balance between commercial and operational uses.

Electric Power Sales Revenue … The revenue attained for the sale of electricity is inthe following table:


Sales Composition of Electric Powerfor the Year 2002

General

Industries

Businesses

Households

5%

13.6%

42.4%

39%


Electric Power Sales Revenue

13,766,222

15,670,552

22,161,068

28,304,026

39,018,461

Number of Consumers in the Year 2002

General

Industries

Businesses

Households93.4%

4%

2.4%

0.2%

34,595.8

36,215.4

38,833.9

41,585.1

43,666.2

Installed Power

Table 5: Electric Power Sales Revenue (Millions of Rupiah)

YearRate Group 1998 1999 2000 2001 2002

Households 4,580,280 5,208,212 6,330,942 8,448,021 13,352,473Businesses 2,644,856 2,924,808 4,032,574 5,156,577 7,021,370Industries 5,634,789 6,536,313 10,320,857 12,903,388 16,313,885General 906,286 1,001,218 1,476,695 1,796,039 2,330,733Total 13,766,222 15,670,552 22,161,068 28,304,026 39,018,461

Number of Consumers … The number of PLN customers at the end of 2002 reached30,953,919, which represents an increase of 3.78% in comparison to the previousyear. Consumers for the Household rate group make up for the largest portion, whichis 93.37% of the total number of PLN consumers, and this can be seen in the followingtable:

Table 6: Number of Consumers (Consumers)

YearRate Group 1998 1999 2000 2001 2002

Households 24,903,376 25,833,618 26,796,675 27,885,612 28,903,325Businesses 847,940 982,281 1,062,955 1,172,247 1,245,709Industries 43,088 42,575 44,337 46,014 46,824General 639,085 666,138 691,418 723,855 758,061Total 26,433,489 27,524,552 28,595,385 29,827,728 30,953,919

Installed Power … The growth in the amount of power installed for every rate groupis shown in table 7:

Table 7: Installed Power (MVA)

YearRate Group 1998 1999 2000 2001 2002

Households 15,887.5 17,046.2 18,588.7 20,250.4 21,342.1Businesses 5,665.0 5,966.8 6,449.0 6,919.9 7,337.4Industries 10,698.9 10,819.0 11,390.4 11,903.2 12,284.2General 2,344.4 2,383.4 2,405.8 2,511.6 2,702.5Total 34,595.8 36,215.4 38,833.9 41,585.1 43,666.2



23,573

24,389

24,822

25,989

25,989

Transmission (kms)

Generator Capacity

20,581

20,592

20,762

21,059

21,112

Electric Power Supply Facilities … To meet the demand for electricity, PLN owns andmanages facilities for the supply of electricity, which include generators, transmis-sion networks and distribution networks, with the following development:

Table 8: Generator Capacity (MW)

Year1998 1999 2000 2001 2002

PLTA 3,006 3,014 3,015 3,106 3,155PLTD 2,535 2,650 2,550 2,585 2,589PLTG 1,347 1,516 * 1,203 * 1,225 1,225PLTGU 6,561 6,282 * 6,863 6,863 6,863PLTP 360 360 360 380 380PLTU 6,771 6,770 6,770 6,900 9,900Total 20,581 20,592 20,762 21,059 21,112

Table 9: Channelling

Year1998 1999 2000 2001 2002

Transmission (kms) 23,573 24,389 24,822 25,989 25,989Main Relay Station (MVA) 45,361 46,964 49,957 50,485 50,485

Table 10: Distribution

Year1998 1999 2000 2001 2002

JTM (kms) 198,486 207,615 * 216,220 222,990 228,104JTR (kms) 260,926 277,995 287,531 297,157 307,226Relay Station (MVA) 24,710 * 26,029 27,551 27,585 27,585

The Development of Electric Power Facilities … Due to the financial burden that thecompany faced, in 2001 PLN could not make any investment in line with the need todevelop generators. The development activities carried out were continuations ofongoing projects. At the end of 2002, PLN’s ongoing projects are specified below:

Table 11: Ongoing Projects

Generator Facility Capacity- PLTA 1,444.9 MW- PLTU 920 MW- PLTD 64 MW

Channelling Facility- Transmission 4,250.6 kms- Main Relay Station 3,473.5 MVA



Quality and Reliability … With the application of the Government Legislation for theProtection of Consumer Rights in the year 2000, PLN is required to improve thequality and reliability of the electricity produced.

The quality of electricity is measured by using a quality standard, which is a range oftechnical limits established for every region according to the local situation. Reliabil-ity is measured by using the SAIFI indicator (System’s Average Interruption FrequencyIndex) and SAIDI (System’s Average Interruption Duration Index).

The company’s programs to gradually improve quality and reliability are as follows:

• The establishment of service standards according to the local conditions

• Improvement in the physical maintenance of distribution networks

• Improvement in the readiness and reliability of generator units

• The formation of a data base for network assets

Another factor that affects the quality and the reliability is the sufficiency of thesupply of electricity. Shortages in supply in several electricity systems is remedied bythe rental of equipment in the short run and by making new investments in themedium and long run, which can be done by PLN or by private electricity providers.

The achievement of SAIDI and SAIFI for Indonesia in the past 5 years can be seen intable 12:

Table 12: SAIDI and SAIFI

Year1998 1999 2000 2001 2002

SAIFI (times/consumer/annum) 18.68 18.58 15.12 18.24 14.17SAIDI (hour/consumer/annum) 15.58 14.06 13.24 17.48 14.35



Improving Reliability … This is done by carrying out activities that support electric-ity production especially in terms of production facilities, such as:

• Revitalisation of generator units with lowering in rating.

• Repair of severely damaged generator units, in order for them to be able to oper-ate normally again.

• Relocation of generator units which do not operate from over-supplied systems tounder-supplied systems.

• Re-operation of aged generator units that can still be operated and are still finan-cially favourable.

• Rescheduling of the inspection program for a number of generator units to antici-pate shortage in supply in 2003.

• Optimisation of maintenance through the implementation of predictive mainte-nance (condition based), which is still combined with Time-based maintenance.

Network Depreciation … The realisation of transmission and distribution networksdepreciation in 2002 reached 16.54%, which consists of transmission depreciation of2.58% and distribution depreciation of 13.96%. The high depreciation is caused bythe increase in the technical depreciation due to the following:

• The realisation of additional consumer segments and additional connected MVA isdominated by consumers for medium tension capacity, which reached 78.93%.

• A limited amount of funds for investment to improve network capacity.

• The service provided for Medium and Low Tension consumers is below standard,since the peak load for the Main Relay Station is 150/20 kV, which is less than 90%of the capacity.

• There is limited generator capacity, such that tension is often lowered/ exhausted,which can result in the loss of High and Medium Tension consumers.

On the other hand, non-technical depreciation also increased due to:

• The effect of the change in the pattern for meter reading, since there is a changein the month stated in the billing.

• Illegal use of electricity with the increase in unofficial Public Road Lighting (PJU),increase in electricity theft due to the increase in the basic rates, and the increasein illegal consumers due to limited new connections as the result of a shortage insupply.

Marketing Control … Due to a limited supply in electricity, PLN must implementcontrol in marketing, which includes the following:

• Selective marketing to increase revenue and anticipate an electricity crisis.

• Joint ventures with generator owners who are captive power providers of mediumand low tension capacities, in order to overcome an electricity crisis.

• Limitation and shifting of load from the peak load time.

Improvement in Service … In anticipation of the application of the GovernmentLegislation for the protection of consumer rights, gradual improvement in the quality



of service is carried out according to the financial capability of the company throughthe following programs:

• The development of transparency in the information regarding the quality of ser-vice for the public.

• The classification of the level of service quality domestically and,

• Using the level of service quality as the turning point for the compilation of invest-ment activities.

Good Corporate Governance … In the year 2002, in line with the instruction given bythe Minister of State Owned Businesses, BPKP implemented a measure and test forthe practice of Good Corporate Governance (GCG) in PT PLN (Persero), which weretaken for aspects of governance that are related to the following:

• The commitment to practice Good Corporate Governance (GCG).

• The structure, process and the roles of the primary units of Good Corporate Gov-ernance (GCG) (Shareholders/General Shareholders’ Meeting, Board of Commis-sioners, Board of Directors) and the supporting units of Good Corporate Gover-nance (GCG).

From the result of the measurement and the test, it can be concluded overall thatthere is sufficient practice of Good Corporate Governance on the various aspects andunits of PT PLN (Persero). This can be seen in the number of points achieved, whichis 73.674 from a target of 100 points (best practice), and hence there is still room toimprove by 23.326 points in order to reach the ideal level of Good Corporate Gover-nance (GCG).

Remuneration … In line with the decision made in the General Meeting of Sharehold-ers, on 8th October 2002, regarding the approval of the Annual Report and the Valida-tion of the Annual Records as well as the Validation of the Report for the Realisation ofthe Program to Coordinate Small Businesses and the Cooperatives of PT PLN (Persero)for the accounting period of 2001, it is decided that the salaries for the members ofthe Board of Directors should range from Rp 36 Million to Rp 40 Million, while themembers of the Board of Commissioners and the Secretary of the Board of Commis-sioners should receive between Rp 6 Million and Rp 16 Million.



Aside from the above remuneration, the Board of Directors and the Board of Commis-sioners as well as the Secretary of the Board of Commissioners will attain otherbenefits in line with the prevailing regulations.

Regular Meetings … A Board of Directors’ Meeting is held regularly, 4 times everymonth, i.e. every Tuesday, and is attended by members of the Board of Directors andthe level 1 officials, with high attendance record by the members of the Board ofDirectors. The number of meetings may increase at the occurrence of urgent mattersthat require immediate decisions.

Meanwhile the Board of Commissioners does not hold regular meetings, although thestatistics report shows that an internal meeting of the Board of Commissioners isheld between 1–4 times every month.

Consultation meetings between the Board of Commissioners and the Board of Direc-tors are held only when there are certain matters to be discussed, and statistically itcan be seen that these meetings are held between once or twice every month.

Organisational Development … In line with organisational coordination in anticipat-ing changes in the business environment and the company’s internal environment,the organisational development carried out by PLN involves the following programs:

• The delegation of more authorities from the head office to the units, such that thehead office only handles the making of policies, strategies, and the control ofimplementation at unit level, in addition, the Board of Directors becomes an insti-tution that is responsible in terms of strategies, policies and operational synergy.

• The empowerment of the regional level units to become Strategic Business Unitswith investment centre level of accountability, followed by the empowerment ofthe lower levels to become profit centres as well as cost and/or revenue centres.

• The formation of a single buyer group to manage the Java-Bali market to antici-pate and adapt to the implementation of competitive market mechanism.

• The formation of IPP Trader groups to bridge the gap between IPP (IndependentPower Producers) and long term contracts and the market.

• The formation of service units that include the provision of engineering services,technical services, training, construction management, production, informationtechnology and accounting administration.

• To upgrade mature Strategic Business Units into Subsidiaries to strengthen theexistence of the company’s business.

The Development of Human Resources … In the effort to consolidate the HumanResources Management System with the system to increase productivity, the devel-opment of Human Resources is carried out by taking the following steps:

• Improvement of the quality of recruits by changing the orientation towards educa-tional background, productivity ratio as the basis of competency and the long-termrequirement of the company.

• Improvement of the system for synergy evaluation by developing an incentive sys-tem based on performance that is gradual and continuous.

• Enhancement of the system for employee career development through the clarifica-tion of the system of postings, the training system and the official voting system.



Human Resources consist of employees from the PLN Holding and the PLN subsidiar-ies, which can be seen in the following table 13.

Table 13: Human Resources Composition (employee)

Year1999 2000 2001 2002

PLN Holding 46,970 44,212 43,507 41,968 - Head Office 1,539 860 1,108 621 - Operation Unit 45,431 43,352 42,399 41,347PLN Subsidiaries 6,106 6,098 6,130 6,270 - PT Indonesia Power *) 3,709 3,709 3,777 3,624 - PT PJB *) 2,397 2,389 2,353 2,308 - PT PLN Batam - - - 240 - ICON+ - - - 46Education and Welfare Institutions - - - 52

Notes: *) unit employees + PLN employees

Capitalisation … To improve the company’s capability, PLN increases the number ofelectricity supply facilities by using funds from various sources. From the beginningof 1992, PLN has been utilising the funds acquired from the Stock Market by issuingbonds, and up to the end of the year 2000 has made 6 (six) public offerings with atotal nominal value of Rp 3,498,430,000,000.00 (three trillion, four hundred andninety-eight billion, four hundred and thirty million rupiah).

From the bonds issued, the following amounts have not yet matured:

Name of Bond Date of Issue Interest Nominal Value(Rp 000)

PLN VI of 12th August 1997 Fixed and/ 600,000,000the year 1997 or Floating



All the funds collected from the public offerings have been used for the expansion ofthe company as it is specified in table 14 below.

Table 14: Use of Funds (In Millions of Rp)

Type Result Cost of Net Project Totalof Bond of Public Offering Amount

Offering

PLN I 300,000 9,192 290,808 - Suralaya – Cilegon Transmission 29,081of the - Large Consumer Transmission 107,599year - Large Consumer Medium Tension1992 Networks 63,978

- Distribution in Java 90,150

PLN II 600,000 17,397 582,603 - Gas Installation for PLTUof the M, Karang & Priok 58,260year - PJava-Bali System Transmission1993 Expansion 332,084

- Java Distribution System Expansion 192,259

PLN III 318,430 9,371 309,059 - Conversion of PLTU M.Karangof the from BBM to BBG 64,902year - Transmission & Large Consumer GI 157,6201995 - Java Distribution System Expansion 86,537

PLN IV 680,000 20,210 659,790 - Transmission & Large Consumer GI 191,339of the - Java, Bali, Sumatra, Sulawesi andyear Kalimantan Distribution Systems1995 Expansion 468,451

PLN V 1,000,000 28,679 971,321 - Transmission & Large Consumer GI 481,066of the - Java, Bali, Sumatra, Sulawesi andyear Kalimantan Distribution Systems1996 Expansion 490,255

PLN VI 600,000 17,430 582,570 - Distribution Projects in Greaterof the Jakarta, West Java, Central Javayear and East Java 466,0561997 - Transmission and Large Consumer

GI in Greater Jakarta, West Java,Central Java and East Java 116,514

The Development of an Information System … The program to develop an informa-tion system for PLN prioritises corporate implementation, which is aimed at revenueprotection, income generation, cash-flow improvement, and the formation of an ex-ecutive information system.

The activities that are being carried out by the company at present are:

• Preparation for the implementation of a coordinated Service Information System(CIS).

• Preparation for the implementation of coordinated Financial Information System(FIS).



• Preparation for the implementation of Executive Information System (EIS), whichinvolves the application of EIS, data Warehousing, Corporate Portal and OfficeAutomation.

• Implementation of Customer Information and Billing System (CIBS).

Improvement in Efficiency … The effort to improve efficiency has been carried oursince 1999 as it is recommended by the audit result for efficiency in operations andefficiency in investment; this was done by an independent auditor using internation-ally best practices as the basis. The implementation of the program to improve effi-ciency is done in the form of an Efficiency Drive Program (EDP), which is aimed atsaving operational cost, increasing income and improving system reliability throughimprovement in the efficiency of generators, channelling, distribution and electricityretail as well as improvement in the efficiency of supporting functions, such as Hu-man resources, finance and management information system. The results achievedthrough EDP are in tangible and intangible forms.

Overall, the EDP program includes Operational Expenditure Efficiency Drive (OPEX),Capital Expenditure Efficiency Drive (CAPEX), and Efficiency Drive Integration (EDI)programs applied in the management of Human Resources, Finance, and InformationSystem.

The results achieved by the EDP program in tangible form (savings) show an improve-ment from one year to the next, i.e. there were savings amounting to Rp 765 Billionand Rp 972.8 Billion in the year 2000 and the year 2001, respectively, and in the year2002 the amount of saving achieved reached Rp 1.56 Trillion.

Meanwhile the results achieved by the EDP program in intangible form can be seen inthe change in the company’s culture, such as the rise in the desire to cut cost/budgetwithout reducing the benefit that can be gained, the rise in the perception to under-take a business/commercial approach in finding the solution to problems in the field,and the rise in innovative and competitive spirits in contributing to the company.

The Empowerment of Society … As a part of the Indonesian nation, the existence ofPLN cannot be separated as part of the society and the nation as a whole. In order toachieve collective growth and prosperity, PLN asks all aspects of the nation to showresponsibility to society through legitimate activities. PLN’s activities in the man-agement of the environment, whether in the implementation of development or inthe operation of electricity supply facilities, are legitimate proofs of PLN’s concernon society. In addition, in its concern to advance and empower the whole of society,PLN continues to develop its Regional Electricity program and the Coordination ofSmall Businesses and Cooperatives (PUKK).

Regional Electricity … In line with the rules of the prevailing regulations, PLN is aBusiness Institution that is owned by the State and it is authorised to Conduct Busi-ness in the Electricity Sector. Therefore, PLN is not yet able to conduct its business ina purely commercial way, since it must also carry out other duties, which are to be theprimary supplier of electricity for social use as well as to be the initiator in thedevelopment of welfare and prosperity for society in a fair and equal manner, and toboost economic activities. In 2002, these social activities were carried out by meansof the Regional Electricity programs and the Coordination of Small Businesses andCooperatives.



Increase in the number of villages that have electricity in the year 2002 reached2,531, with 623,422 additional customers. With the increase in the number of vil-lages with electricity, by the end of 2002, 52,007 villages have electricity or 78.55% ofthe total number of villages have electricity, with the number of customers totallingto 20,031,297.

Financially, some of the villages, which now have electricity, cannot yet meet thecriteria. However, in its concern for the nation as a whole, PLN takes responsibility inthe advancement of the whole of Indonesian society, whether this concerns the citiesor the villages. In addition, with electricity, the villages will be able to grow, and theirsociety’s standard will improve and in turn become a potential market for PLN in thefuture.

The Coordination of Small Businesses and Cooperatives (PUKK)In addition to its role as a supplier of electricity, PLN is instructed by the Governmentto empower Small Businesses and Cooperatives, as it is established within the Decreeof the Minister of Finance, No. 316/KMK.016/1994, regarding the Coordination ofSmall Businesses and Cooperatives (PUKK). In 1999, this instruction was substitutedby the Partnership and Environmental Coordination Programs, however in the year2000, in line with the circulated Document of the Minister of Finance, No. 31/MK.1/2000, the PUKK program was reactivated.

Since 1991, PLN has carried out Coordination programs for Small Businesses andCooperatives through the PLN units distributed throughout Indonesia. The funds usedfor the program comes from the Government portion that make up 3-5% of thecompany’s profit after tax, while the funds used to implement PUKK becomes part ofthe company’s operational budget. Therefore, in view of the loss shown in PLN’sFinancial Report in 1997, from 1998, PLN only extended funds that originate fromloan repayment made by coordinated partners.

Assistance for PUKK may be given in the form of a Loan to boost Working Capital,which is to be repaid gradually, or it can be in the form of a Bequest for education/training, improvement of production quality or marketing. The targets for coordina-tion by PLN are Individually-owned Businesses, Cooperatives, or Regional Unit Coop-eratives, including PLN’s Employee Cooperatives, with certain limitations. Priority isgiven to those who have not yet developed in reputation and are located around theareas of PLN’s activities. The assistance provided by PLN for Small Businesses andCooperatives is distributed throughout Indonesia. During 2002, PLN extended assis-tance in the form of funds amounting to Rp 9,164,417,078,-, which consists of:

- Loan amounting to Rp 7,555,187,267,-- Bequest amounting to Rp 1,609,229,881,-- Other expenses amounting to Rp 964,737,135,-

The Government’s instruction to extend assistance to Maluku and North Maluku wasgiven via BRI (Bank Rakyat Indonesia) in the form of a loan for Small Businesses andCooperatives amounting to Rp 520,000,000,-, which is included as other expenses.

The PUKK program is carried out optimally as far as possible, taking into account thatthere is a need to selective, effective and efficient.

Matters that have arisen in the implementation of the program:

• Coordinated partners are located in various places, such that sufficient facilitiesand infrastructure are needed for coordination and monitoring.



• The assisted Small Businesses are those who are not yet reputable, hence there isa risk involved.

• In general the coordinated partners do not possess marketing strength and are notused to compiling reports, and hence monitoring and development are not easy.

The positive side of the Government’s instruction that can benefit in terms of thecompany’s advancement are:

• The company can show responsibility to the public by showing their concern for theeconomic conditions faced by the community around them.

• When a coordinated partner becomes successful, the company’s image is strength-ened.

• In certain conditions, this can be the means to settle unrest in society.

The Environment … To be consistent in one of its missions to conduct environmen-tally friendly business activities, in 2002, PLN conducted activities related to envi-ronmental concerns, which included the compilation of general policies for the com-pany that relates to the environment, participation in a national program on changesin the global climate, environmental studies, environmental management and moni-toring for generators and channels.

Community Development … As a company that supplies electricity for the public’sinterest in sufficient quantity and quality, PLN carries out development activities andoperates installations which are distributed all over Indonesia. The community aroundthe areas of PLN installations must attain indirect benefits from the existence of theinstallations through community development programs implemented by PLN, by as-sisting the community around the installation areas in the improvement of theirwelfare, education, public facilities, and by training the community so that they willparticipate in monitoring the safety of the installations, and feel that the installa-tions belong to the community.

Other targets for its community development programs are communities that havesuffered from disasters that are related to the existence of PLN installations.

Community development programs have been implemented in PLTA Maninjau, PLTASingkarak nad PLTA Koto Panjang, which involve fish farming in lakes, the repair ofmosques, the provision of scholarships to students of high achievements living aroundthe lake area, the building of wells for the residents who were relocated to the KotoPanjang lake, etc.

In Jakarta, assistance has been given in the form of food, with a value that amountedto Rp 300 Million, for people that have been evacuated from flooded areas.

Priority for assistance is given to communities around the installation areas outsideJava, in geothermal installation areas outside Java, Extra High Tension Installations(SUTET), High Tension Installations (SUTT), Main Relay Stations, Service Offices,Warehouses, and Medium Tension Installations (SUTM) situated in troubled areas, inthe form of facilities for religious worship, reforestation in the areas around lakeTondano, and scholarships for underprivileged children of high achievements.



The steps taken to settle a number of legal obligations by PLN.

The Legal Obligationsof PT PLN (Persero)


Legal Actions

DAFTAR PERKARA/GUGATAN PIHAK KETIGA

No. NAMA DAN NOMOR PERKARA NILAI PERKARA/GUGATAN PENGACARA/KUASA HUKUM KONDISI TERAKHIR

1. Perkara gugatan Sdr. Abdul Kohar,(No. 14/Pdt.G//1996/PN.KRW)Konsultan Hukum/Pengacara dari PT PLN (Persero) —- Pada tingkat PN,

PLN menangPada tingkat PT, putusan PT menguatkan putusan PN.Saat ini dalam proses pemeriksaan Kasasi di MA.— Perkara gugatan terhadap

tanah yang bersangkutan yang di atasnya didirikan tapak tower 500 kV di daerah Karawang-Jawa BaratPihak-pihakyang berperkara:Penggugat : Sdr. Abdul KoharTergugat I : PT PLN (Persero)Tergugat II : Asea Brown

BoveriTergugat III : PT Balfour Bratty Sakti Indonesia (PT. BBS)

2. Perkara gugatan PT Yorkshire(No. 58/Pdt.G/1995/PN. Bale Bandung)Rp 50 juta dan pengembalian tanah yang dipergunakan PLN seluas 3320 M2. Konsultan Hukum/Pengacara dariPT PLN (Persero — Pada tingkat PN gugatan Penggugat dikabulkan sebagian.Pada tingkat PT, putusan

PN dibatalkan.Saat ini dalam proses pemeriksaan Kasasi di MA.— Perkara gugatan terhadap

sebagian tanah yang dipergunakan untuk pembangunan Gardu Induk Cikancung, dimana sebagian tanah + 3000 M2

yang telah dibayar PLN kepada H. Kama ternyata merupakan tanah HGB PT Yorkshire.Proses pembebasan tanah inidilakukan pada tanggal 6 Oktober 1993.Pihak-pihak yang berperkara:Penggugat : PT YorkshireTergugat I : PT PLN

(Persero)Tergugat II : H. Kama


3. Perkara gugatan Sdr. Atok Sukandar(No. 53/Pdt.G/1997/PN.Bdg)Perkara mengenai rumah atau bangunan yangdilintasi jaringan transmisi 150 kV di daerah Buah Batu BandungPihak-pihak yang berperkara:Penggugat : Sdr. AtokSukandarTergugat I : Dept. P & E cq. PT PLN (Persero) cq. Pring Jabar Jaya.Tergugat II : Dept.

Dagri cq. Pemda Jawa Barat cq. Pemda Kotamadya BandungTergugat III : Bappenas cq. BapedaRp 1 Milyar dan minta dipindah-kan dari rumah yang saat ini ditempatkan. Konsultan Hukum/Pengacara dari PT PLN (Persero) —- Pada tingkat PN,

PLN berhasil memenang-kan perkaraPada tingkat PT, putusan PT menguatkan putusan PN.Saat ini dalam prosespemeriksaan Kasasi di MA.

4. Perkara gugatan Sdr. Toto Fadilah(No. 54/Pdt.G/1998/PN. BaleBandung)Perkara ganti rugi tanah seluas + 710 M2 yang digunakan sebagai jalan masuk menuju GI Cibabat

Rancaekek Bandung sejak tahun 1995. Perkara ini menjadi gugatan yang diajukan ke PN Bale Bandung sejak 1 Juni1998.Pihak-pihak yang berperkara:Penggugat : Sdr. Toto FadilahTergugat I : Bpk. YatmanTergugat II : Bpk.Drs. H. Taufik IsmailTergugat III : Bpk. H. MunahRp 1,3 Milyar. Konsultan Hukum/Pengacara dari PT PLN (Persero) Pada tingkat PN, PLN kalah

(putusan PN tanggal 19 Oktober 1998).Pada tingkat PT, putusan PT menguatkan putusan PN.Pada saat ini telahdilakukan perdamaian dengan Akta Notaris yang disahkan oleh PN Bale Bandung bernilai Rp 275 juta.


LIST OF CASES/THIRD PARTY CLAIMS


No. CASE NAME AND NUMBER CASE VALUE/ ATTORNEY/LEGAL STATUSCLAIM REPRESENTATIVE

Charged III : Mr. H. Munah Notarial DocumentCharged IV : Mr. Beli legalised by the StateCharged V : Mr. Alakarim Court of Bale Bandung.Charged VI : The Government of RI c.q. Minister of

Internal Affairs, c.q. Governor of KDHLevel I, East Java c.q. Bandung Regionc.q. Sub-district Head of Cimahi.c.q. Head of the Households of Melong

Charged VII : The Government of RI c.q. Minister ofInternal Affairs c.q. Governor of KDHLevel I, East Java c.q. Regional Headof KDH Level II c.q. Bandung Regionc.q. Sub-district Head of South Cimahi.

Charged VIII: The Government of RI c.q. Departmentof Mining and Energy.

5. The case of the heir of Emad bin Uci Rp 163 Billion and Legal Consultant/ - At State Court level,(No. 39/Pdt.G/1998/PN. Pwk). return of land of Attorney from PLN won.

88.5 Ha. PT PLN (Persero).- A claim for compensation by the heir of Emad bin - At High Court Level, the

Uci (a resident of the Sub-district of Manis, in the plaintiff’s claim could notRegion of Purwakarta for land within a forest used be accepted, and theas entrance to the Powerhouse of PLTA Cirata and court stated that thea Disposal Area of + 90 Ha, in Mount Cantayam Timur, parties involved will notacquired by PLN from Unit III of West Java Perhutani disturb the operations ofby means of exchange, based on the approval given PLTA Cirata.by the Director General of Forestry, the Departmentof Farming (Document No. 3307/DJ/I/1981, dated21st September 1981) or a building, in the path of a - At present, undergoing150 kV transmission network, in Buah Batu Bandung. appeal in the Supreme

Court.- The heir of Emad bin Uci forwarded claim in 1999

through the State Court of Purwakarta.

- Parties involved :Plaintiff : The heir of Emad bin UciCharged I : Perum PerhutaniCharged II : PLN PI Kitring Jabar JayaCharged III : PT PLN PJB IICharged IV : BPN Purwakarta

6. The case of the bag maker, whose factory is within the Rp 33 Billion. Legal Consultant/ - At State Court level, thepath of a 500 kV transmission network in the Paiton- Attorney from plaintiff’s claim was partlyKediri line (No. 802,803,804/Pdt.G/1999/PN.Sby). PT PLN (Persero). granted.

- Parties involved: - At High Court Level, the de-Plaintiff : Bag Maker cision affirmed the decisionCharged : PT PLN (Persero) made in the State Court.

- PLN won after an appealwas made for caseNo.802,803,804/Pdt.G/1999/PN.Surabaya.

7. The case of Bukaka Teknik Utama Legal Consultant/ - At PTUN, PLN lost.(No.083/G.TUN/2000/PTUN/JKT). Attorney from PT PLN

(Persero) for PTUN - At PT TUN, the decision- A claim from PT Bukaka Teknik Utama against the issue (Commercial Court) affirmed the decision

of a document from PT PLN (Persero), Number 279/ and at PTUN (Higher made in the PTUN.612/DITOP/2000-R, dated 11th May 2000, whereby a Commercial Court),Notification of Award is cancelled for a tender won by the appeal is handled - A peaceful settlement wasPT Bukaka Teknik Utama. by the Office of the reached between PT.

Attorneys Maiyasyak, Bukakka Teknik UtamaRahardjo & Partners and PT. PLN (Persero).

Legal Actions


No. CASE NAME AND NUMBER CASE VALUE/ ATTORNEY/LEGAL STATUSCLAIM REPRESENTATIVE

Parties involved:Plaintiff : PT Bukaka Teknik UtamaCharged I : PT PLN (Persero)

8. Objection to the execution of a ruling in the case In line with the Internal/In-house - In the State Court of Northinvolving “PT ENICO” (No. 154/Pdt/Bth/1999/PN. ruling PK No. 573. Attorney of PLN. Jakarta PLN won. The rulingJkt.Ut. jo.No. 870/Pdt/1999/PT. DKI). PK/PDT/1997, the was to halt execution

Charged Party must and PLN’s confiscatedIn the main case (dispute in the development of fly ash pay the Plaintiff funds, amounting todisposal, PLTU Suralaya) between PT Enico (the Plaintiff) the following: Rp 2.085 Billion, was toand the Government (Charged Party), PT Enico’s claim be returned to PLN.was granted by the Court (ruling No. 573. PK/PDT/1997). Rp 2,185,089,704.60

with accumulated - In the High Court ofIn the execution of the ruling, the asset to be confis- interest of 3% per Jakarta PLN won (Affirm-cated belongs to PLN. month from 23rd May ing the State Court ruling).

1991, and an enfor-PLN could not accept the execution of the cement fund of - In the Supreme Court PLNconfiscation and forwarded its Objection. Rp 500,000,- per day lost.

Party in Objection: PT PLN (Persero) (PT. ENICO claims - A friendly settlement isCharged I : PT ENICO (Gunawan Purnama) that the total amount carried out through aCharged II : The Government of RI accumulated reached Notarial Document

Rp 91 Billion in 2001). legalised by the StateCourt of North Jakarta,amounting to Rp 13 Billion.

9. The case of the damaged underwater cable due to the PLN claims Internal/In-house - At State Court level, PLNship “Ocean Competence” US$ 10 Million. Attorney from lost.(No. 195/Pdt.G/1996/PN.Jkt. Pst jo. PLN.No. 759/Pdt/1997/PT.DKI jo. No. 703 K/Pdt/1999). - At High Court Level, PLN

lost.On 6th October 1994, the anchor of the ship MV OceanCompetence caught a 150 kV cable in the Java-Madura sea, - At Supreme Court, PLNsuch that the cable is damaged and must be exchanged. lostUndergoing a review

in the Supreme Court.PLN forwarded a claim to the ship for compensation.

Plaintiff : PT PLN (Persero) P3BCharged I : Wing Tak Investment (Owner)Charged II : Mr. Wong Hei Fat (Skipper)Charged III : PT. Newship NB. Surabaya BranchCharged IV : PT. Newship NB Jakarta Head OfficeCharged V : M.O. Ship Management, TokyoCharged VI : U.K. P&I Club, London

10. The case of the damaged underwater cable due to PLN claims Office of the - At State Court level, PLNthe ship “KOTA INDAH” Rp 154 Billion. Attorney General lost (claim refused).(No. 279/Pdt.G/1999/PN. Sby. Jo. c.q. DistrictNo. 20/Pdt/2001/PT.Sby). Attorney of - At High Court Level, PLN

Surabaya as the won (claim granted partlyOn 19th October 1999, the anchor of the ship MV Kota State Attorney (US$ 5.7 million + Rp 15,8Indah caught a 150 kV cable in the Java-Madura sea, (JPN). Billion).such that the cable is damaged and must be exchanged.

- Undergoing appeal in thePLN forwarded a claim to the ship for compensation. Supreme Court.

Plaintiff : PT PLN (Persero) P3BCharged I : Advance Container Lines (Owner)Charged II : Pacific International LinesCharged III : Shaukat Ali Akhtar (Skipper)Charged IV : P & I Club/Insurance

Charged V : PT. Pelayaran Samudera Selatan

Legal Actions


An overview of the financial data based on the reports auditedby the Financial Review Body (BPK) of the Republic of Indonesia.

An Overview ofthe Financial Data ofPT PLN (Persero)


The following is an Overview of the Main Financial Data as per December 31st, 2002(consolidated statement), 31st December 2001 (consolidated statement), 31st Decem-ber 2000 (consolidated statements, 31st December 1999 (consolidated statement),31st December 1998 (consolidated statement), and 31st December 1997 (consolidatedstatement, based on the Financial Report audited by the Financial Review Body of theRepublic of Indonesia (BPK-RI) for the year 2002, by the Public Accountants’ Office ofPrasetio Utomo & Co. for the year 2001 and by the Public Accountants’ Office of HansTuanakotta & Mustofa (HTM) for theyears 1998, 1999, and 2000, with the Opinion of“Acceptable without Exception”.

An Overviewof ImportantFinancial Data

THE BALANCE SHEET(in millions of rupiah)

PT PLN (Persero)

Details 31st Dec '02 31st Dec '01 31st Dec '00 31st Dec '99 31st Dec '98

Net Fixed Asset 185,617,938 53,048,330 52,641,089 51,819,420 51,394,967

Work in Progress 9,587,301 12,340,035 14,227,264 13,481,256 14,291,320

Fixed Asset 195,205,239 65,388,365 66,868,353 65,300,676 65,686,287

Share Investment 289,886 32,774 26,157 29,219 57,080

Net Deferred Tax 10,191 20,811 4,055

Other Assets 5,499,980 3,101,405 2,364,115 1,432,878 1,731,969

Current Assets 12,893,307 11,363,162 8,740,512 6,456,711 6,985,014

Cash and Other Liquid Assets 7,218,517 6,142,461 4,645,442 2,929,692 4,013,967

Provision 2,104,459 1,394,162 915,414 844,021 770,596

Receivables 2,053,296 2,893,599 2,721,180 1,728,766 1,597,750

Other Current Assets 1,517,035 932,940 458,476 954,232 602,701

Total Assets 213,898,603 79,906,517 78,003,192 73,219,484 74,460,350

Equity 152,084,320 19,198,001 18,625,103 12,692,692 22,095,520

Deferred Income 3,998,868 3,502,134 3,234,451 3,076,638 2,972,169

Long-Term Liability 42,968,624 32,936,219 34,255,802 27,727,899 31,558,947

Short-Term Liability 14,846,791 24,270,163 21,887,836 29,722,255 17,833,714

Total Equity and Liabilities 213,898,603 79,906,517 78,003,192 73,219,484 74,460,350


IKHTISAR DATA KEUANGAN PENTING

"Berikut ini disajikan ikhtisar Data Keuangan Pokok per 31 Desember 2002 (konsolodasi), 31Desember 2001 (konsolidasi), 31 Desember 2000 (konsolidasi), 31 Desember 1999(konsolidasi), 31 Desember 1998 (konsolidasi) dan 31 Desember 1997 (konsolidasi),berdaasarkan Laporan Keuangan yang telah diperiksa oleh Badan Pemeriksa Keuangan RI (BPK-RI) untuk tahun 2002, Kantor Akuntan Publik Prasetio, Utomo & Co untuk Tahun Buku 2001 danKantor Akuntan Publik Hans Tuanakotta & Mustofa (HTM) untuk Tahun Buku 1998, 1999 dan2000 dengan Pendapat ""Wajar Tanpa Pengecualian""."

"AKTIVA, EKUITAS DAN KEWAJIBAN"

(dalam jutaan rupiah)

PT.PLN (Persero)

Uraian 31 Des '02 % 31 Des '01 31 Des '00DEVIASI 31 Des '99 DEVIASI 31 Des '98 DEVIASIDEVIASI 31 Des '96

Aktiva Tetap Bersih 249.90 " 132,569,608 " " 185,617,938 " 249.90 " 53,048,330 " " 52,641,089 " 2 " 51,819,420 " 1" 51,394,967 " #REF! #REF! 29839075

#DIV/0!#DIV/0! #REF! #REF!

Pekerjaan Dalam Pelaksanaan (PDP) (22.31) " (2,752,734)" " 9,587,301 " (22.31) " 12,340,035 " " 14,227,264 " 6 " 13,481,256 " (6) " 14,291,320 " #REF! #REF! 18209388


Aktiva Tetap 198.53 " 129,816,874 " " 195,205,239 " 198.53" 65,388,365 " " 66,868,353 " 2 " 65,300,676 " (1) "65,686,287 " #REF! #REF! 48048463




FINANCIAL RATIOS

PT PLN (Persero)

1st Jan '02 1st Jan '01 1st Jan '00 1st Jan '99 1st Jan '98

Details to to to to to

31st Dec '02 31st Dec '01 31st Dec '00 31st Dec '99 31st Dec '98

Liquidity*) 86.84 46.82 39.96 21.73 39.17

Cash Ratio 62.79 31.05 33.66 0.10 0.23

Material Turnover 1.37 1.55 1.89 2.08 1.57

Fixed Asset Turnover 0.30 0.41 0.34 0.30 0.29

Solvability 27.03 71.59 71.97 78.46 66.33

Debt Equity Ratio 28 : 72 75 : 25 75 : 25 78 : 22 66 : 34

Rentability *) (5.00) 0.90 (40.10) (18.61) (17.62)

Operating Ratio 118.47 90.33 120.66 134.41 119.75

Rate of Return onNet Average Fixed Assets (1.71) 1.62 (8.92) (10.66) (5.90)

Self Financing Ratio 86.17 101.66 46.90 8.63 56.64

Turnover of Receivables from Customers 19.00 9.77 8.78 9.65 9.52

Length of Costumer Receivables 19 37 42 38 38

Debt Service Coverage **) 2.02 1.03 2.46 0.48 0.11

Liquidity Ratio 0.87 0.47 0.40 0.22 0.39

Generator Rate (in Rupiah) per kWh 300.30 183.64 161.04 96.35 125.98

Production Cost per kWh of Production 533.85 325.74 516.71 318.50 298.00

Cost Efficiency *) 0.0017 0.0026 0.0017 0.0023 0.0028

Times Interest Earned ***) 2.51 (0.22) 1.76 (0.15) (0.58)

Equity Asset Ratio 71.10 24.03 23.88 21.54 33.67

Net Fixed Asset Equity Ratio 81.93 36.19 35.38 30.43 48.77

Gross Fixed Asset Long-Term Liability Ratio 165.70 216.17 196.96 229.29 190.39

*) In accordance to the calculation in the Decree of the Minister of Finance No. 826/KMK.013/1992, dated24th July 1992

**) In line with the Decree of the Minister of Mining and Energy, No. 75-12/40/600.1/1991***) Meaning (Profit before Tax plus Loan Interest Rate) divide by Loan Interest Cost



An analysis and general discussion on the result of the synergy ofthe management, of finance, income, as well as the obligations

that must be taken by PT PLN (Persero).

The Synergy of theManagement


General ManagementDiscussions

Introduction … In 2002, the financial condition of PLN began to show an improve-ment due to the support given by the Government to save the company through theprovision of subsidy and gradual rate increase, as well as a re-evaluation of fixedassets, which was carried out by the company.

The Synergy of the Management … The financial condition of PLN was classified asunhealthy due to an operational loss that reached Rp 8,162 Billion. Although the BasicElectricity Rate for 2002 had already been approved, the average sale price thatreached Rp 448.03/kWh was still below the cost for production or below its economicvalue.

The operational side was classified as having a High Potential for Growth, which wasshown by the increase in a number of indicators, such as asset productivity, employeeproductivity, increase in electricity sales and the growth in material turnover.

A high classification was given in terms of the Benefit to Society, shown by the indi-cator that reflects the satisfaction of the customers, given a “B” grade, while interms of environmental awareness and government instruction, an “A” grade wasreceived.

Profit and Loss … The company’s loss for the period in session amounts toRp 6,059.6 Billion, in comparison to the budgeted Rp 808.7 Billion, which is due to:

• An operational income of Rp 44,183.4 Billion or 99.05% of the budgeted amount,due mainly to the receipt of government subsidy, as well as an increase in the BasicRate for Electricity since the beginning of 2002

• Operational cost amounting to Rp 52,345.6 Billion or 125.66% of the budgetedamount, due to the re-evaluation of fixed assets in the year 2002, such that depre-ciation has reached 399.57% from the budget, and the cost of the purchase ofelectricity is Rp 10,924.6 Billion or 122.37% of the budget

Cash Flow … The cash balance as per 31st December 2002 was Rp 7,218.5 Billion,which is an increase of Rp 1,076.1 Billion in comparison to the cash balance at thebeginning of 2002, which was Rp 6,142.5 Billion. This is due to:

• Income from operations increases to Rp 4,321.4 Billion as the result of the in-crease in income by 102.09% and a decrease in operational cost of 55.37% from thebudget

• Investment cost has increased by 102.27% from the budget

• Cost of funds has decreased by 55.37% from the budget

Financial Synergy …

Assets … The total assets of PLN continues to increase from Rp 74,460 Billion on31st December 1998, although it showed a decrease on 31st December 1999 by 1.67%to Rp 73,219, it increased by 31st December 2000 by 6.52% to Rp 77,995 Billion and in2001 it increased by 2.44% to Rp 79,906 Billion and in 2002 it increased by 167.69% toRp 213,899 Billion, due to the company’s growth and the re-evaluation of fixedassets, which was carried out on 1st January 2002 for the fixed asset position of31st December 2001.



Fixed Assets …

1. Operating AssetsThe provision of electricity is a business that requires sufficient investment. There-fore, the value of fixed asset becomes the major component of the asset value ofthe company. With the increase in PLN’s installations, PLN’s net fixed asset valuecontinues to increase.

On 31st December 1998, PLN’s net fixed asset value amounted to Rp 51,395 Billion,and increased by 0.83% to Rp 51,819 Billion on 31st December 1999. On 31st December2000, it increased by 1.59% to Rp 52,641 Billion and on 31st December 2001, it in-creased by 0.77% to Rp 53,048 Billion. Finally on 31st December 2002, it increased by249.90% to Rp 185,618 Billion.

In meeting the increasing public demand for electricity, PLN continues to increase itscapacity, by adding the number of electric power centres, transmission networks, aswell as distribution networks. This increase in capacity is reflected in the increase infixed operating asset value, especially after a re-evaluation of the value of fixedassets.

2. Work in ProgressWork in Progress becomes part of fixed assets. The value of Work in Progress as per31st December 1998 amounted to Rp 14,291 Billion, but it decreased on 31st December1999 by 5.67% to Rp 13,481 Billion. On 31st December 2000, the value increased by5.53% to Rp 14,227 Billion and decreased again on 31st December 2001 by 22.31% toRp 9,587 Billion, due to a limited amount of funds available for investment from theGovernment, from PLN internally, as well as borrowings in addition to Work in Progressthat had been completed in 2002.

3. Current AssetsIn line with the increase in business activities, there have been changes in the valueof the current assets of PLN. On 31st December 1998, the value reached Rp 6,985Billion, but it decreased by 7.60% to Rp 6,457 Billion on 31st December 1999. On 31st

December 2000, it increased by 30.01% to Rp 11,363 Billion, and on 31st December2002, it increased by 13.46% to Rp 12,893 Billion, due to the receipt of subsidy fromthe Government, and an increase in internal source of funds from the sale of elec-tricity.

Liabilities …

1. EquityCapital is used to fund the company’s business activities, but on 31st December1999, equity decreased by 42.56% from Rp 22,096 Billion on 31st December 1998, toRp 12,693 Billion. This decrease is seen in the value of the owner’s equity (theGovernment of RI) as well as in the undistributed profit balance, since the companyexperienced a significant loss. However on 31st December 2000, the value increasedby 46.73% to Rp 18,625 Billion, although the company experienced a net loss due to afinancial restructuring, which was approved by the shareholders, in the form of aredefinition of the cumulated interest and the loan penalty due into capital injection(equity), and on 31st December 2001, the value increased again by 3.08% to Rp 19,198Billion, due to an increase in the actual budgeted (APBN) amount for the year 2001,



and in the company’s profit in 2001. On 31st December 2001, the equity value in-creased by 692.19% to Rp 152,084 Billion due to the re-evaluation of fixed assets,which was carried out on 1st January 2002 for the fixed asset value as per 31st Decem-ber 2001.

2. Deferred IncomeDeferred Income comes from the receipt of payment for connections from custom-ers, which will be acknowledged as income that is to be amortised for a period of 20years. On 31st December 1998, the amount of deferred income reached Rp 2,972Billion. On 31st December 1999, it increased by 3.53% to Rp 3,077 Billion. On 31st

December 2000, it increased by 5.13% to Rp 3,234 Billion. On 31st December, it in-creased by 8.28% to Rp 3,502 Billion, and on 31st December 2002, it increased againby 14.18% to Rp 3,999 Billion, due to an increase in the number of customers in 2002.

3. Long-Term LiabilitiesAside from the funding that originates from the Government of RI, the company alsoacquires loans from a number of parties locally and from abroad, in the form ofextended loan. The Long-Term Liability balance on 31st December 1998 reached Rp31,559 Billion. In 1999, it decreased by 12.14% to Rp 27,728 Billion. On 31st December2000, it increased by 23.53% to Rp 34,252 Billion, but it decreased on 31st December2001 by 3.85% to Rp 32,936 Billion, although it increased again by 31st December 2002by 30.46% to Rp 42,969 Billion, due to the redefinition of the short-term loan fromthe purchase of electricity from private electricity providers (IPP) into long-termloan, in line with the contract amendment that has been applicable since 2002. Inaddition, there is a tax amount to be paid for the re-evaluation of fixed assets, whichare not yet due.

4. Short-Term LiabilitiesThe amount of Short-Term Liabilities reached Rp 17,834 Billion by 31st December1998. On 31st December 1999, it increased by Rp 11,888 Billion to Rp 29,722 Billion,and it decreased on 31st December 2000 by Rp 7,833 Billion to Rp 21,884 Billion.On 31st December 2001, it increased by Rp 2,386 Billion to Rp 24,270 Billion, and


on 31st December 2002, it decreased by Rp 9,423 Billion to Rp 14,847 Billion, due tothe redefinition of the short-term loan from the purchase of electricity from privateelectricity producers into long-term loan, in line with the contract amendment, whichhas been applicable since 2002. In addition, there was a significant amount of repay-ment made for short-term obligations.

Profit and Loss …

1. Company ProfitsPLN’s profit comes from the sale of electricity, the payment made by the custom-ers for Connections, and other incomes. Within the last five years, the company’sprofit has been increasing, that is to say that in 1998, it reached Rp 14,036 Billion.In 1999 it increased by 13.97% to Rp 15,997 Billion, in 2000 it increased again by41.00% to Rp 22,557 Billion, and in 2001 it increased by 56.76% to Rp 35,360Billion. Then in 2002, it increased by 24.95% to Rp 44,183 Billion. The increase inPLN’s profit is due to the increase in the sales revenue for electricity caused by theincrease in the basic rate of electricity in 2002, in addition to an increase in thenatural sales volume for electricity (kWh).

2. Company ExpensesThe company’s expenses in 1998 reached Rp 16,809 Billion and on 31st December1999 it increased by Rp 4,694 Billion or 27.93% to Rp 21,503 Billion. In 2000, itincreased by Rp 5,713 Billion or 26.57% to Rp 27,216 Billion, and in 2001, it in-creased by Rp 4,714 Billion or 17.36% to Rp 31,939 Billion, then in 2002, it in-creased by Rp 20,407 Billion or 63.89% to Rp 52,346 Billion. The increase in opera-tional expenses in 2002 is due to the increase in production, which is followed byan increase in the physical use of gas fuel, geothermal fuel, and petroleum. Inaddition, there was an increase in the price of petroleum in July 2002, as well asthe fact that the cost of gas and geothermal fuels had to be paid in US Dollars. Inthe meantime, the largest expense comes from the cost of the depreciation offixed assets, due to the re-evaluation of fixed assets in 2002.

3. Other Income/(Expenses)Other expenses in 1998 reached a negative Rp 6,383 Billion and on 31st December1999, it decreased by 16.21% to negative Rp 5,348 Billion. On 31st December 2000,it increased by 261.46% to negative Rp 19,331 Billion, and on 31st December 2001,it decreased by 85.23% to negative Rp 2,854 Billion, then on 31st December 2002,it increased by 155.51% to Rp 1,584 Billion, due to the increase in other income/(loss) for 2002, especially as the result of the decrease in the interest burden andthe gain in the exchange rate caused by the strengthening of the rupiah.

4. Profit/(Loss)The profit/(loss) position after tax (PPh) on 31st December 1998 is a loss of Rp9,546 Billion. On 31st December 1999, it increased by 19.09% to a loss of Rp 11,368Billion, on 31st December 2000, it increased again by 116.49% to a loss of Rp24,611 Billion, and on 31st December 2001, it increased by 100.73% to a profitposition of Rp 180 Billion, then on 31st December 2002, it decreased by 3,464.20%to a loss of Rp 6,060 Billion, due to the reasons already stated.



Rentability … Rentability is the difference between Profit before Tax and AverageNet Fixed Asset, plus the average current asset. The company’s rentability on 31st

December 1998 was a negative 17.62%. On 31st December 1999, it decreased tonegative 18.61%. On 31st December 2000, it decreased again to negative 40.10% and31st December 2001, it increased to a positive 0.90%, and then on 31st December2002, it decreased to a negative 5.00%. The decrease in rentability is due to theincrease in the company’s loss in relation to the increase in the cost of depreciation,on the one hand, and on the other, the increase in the value of fixed assets, due tothe re-evaluation of fixed assets on 1st January 2002 for the fixed asset position asper 31st December 2001.

Liquidity … Liquidity is the difference between current assets and short-term loans.On 31st December 1998, the liquidity position was 39.17%. On 31st December 1999, itdecreased to 21.73%, on 31st December 2000, it increased to 39.96% and on 31st

December 2001, it increased to 46.82%. Then on 31st December 2002, it increased to86.84% due to the receipt of Government Subsidy and the increase in internal sourceof funds from the increased sale of electricity on the one hand, and on the other, theredefinition of the short-term loan from the purchase of electricity from privateproviders into long-term loan.

Solvability (in line with the Decree of the State Minister of State Owned Busi-nesses, No. KEP-210/M-PBUMN/1999) … Solvability is the difference between totalobligations and the total fixed assets and on 31st December 1998 it reached 63.33%.On 31st December 1999 it increased to 78.46%, on 31st December 2000, it decreasedagain to 71.97%, and on 31st December 2001, it decreased to 71.59%. Then on 31st

December 2002, it decreased to 27.03%. The decrease in solvability is due to theincrease in long-term loans being smaller than the increase in total fixed assets, inrelation to the re-evaluation of fixed assets on 1st January 2002 for the position asper 31st December 2001.

Return on Equity … Return on Equity is the difference between operating profit/(loss) and equity, which in 1998 reached a negative 11.84%. On 31st December 1999,it reached a negative 43.38%, on 31st December 2000, it reached a negative 25.02%,and on 31st December 2001, it became a negative 17.27%. Then on 31st December2002, it decreased to a negative 3.98%. The decrease in the Return on Equity is dueto the increase in operating loss due to the increase in depreciation cost on the onehand, and on the other, to the increase in equity as the result of the difference in thefixed asset re-evaluation.

Return on Investment … Return on Investment is the difference between operatingprofit/(loss) and total assets, which in 1998 reached a negative 3.72%. In 1999 itdecreased to negative 7.52%, in 2000 it increased again to negative 5.97% and in2001, it increased to negative 4.15%. Then in 2002, it decreased to negative 2.88%.The decrease in the Return on Investment is due to the increase in operating loss asthe result of the increase in depreciation cost on the one hand, and on the other, theincrease in the value of fixed assets in relation to the re-evaluation of fixed assetson 1st January 2002 for the value of fixed assets as per 31st December 2001.



Business Prospects … The national economic growth that is not back to normal has aheavy impact on the electricity sector, however, in line with the plan to restructurethe electricity sector, and after the economic crisis is over, the growth in the electric-ity business is expected to return to normal.

Since the ratio of electricity installation and electricity consumption per capita is stilllow, and Indonesia is still at the early stages of industrialisation, there is still a largeopportunity for PLN to increase its business potential in the household and industrialmarkets.

The steps taken by PLN to increase its business potentials include:

• The expansion of the interconnection system, such that the management of theelectricity system becomes more efficient, which means that there is a potentialto supply an increasingly cheaper electricity that is more reliable and is able toreach the load centres, which have so far been unreachable.

• The take over of captive power providers to increase the number of customers.

• Taking opportunity in the implementation of the government’s plan to advance andprovide transport facilities in the form of railways within the city and inter-cities,especially in Java, and the modernisation of agriculture, as well as the accelera-tion of development in the Eastern Regions of Indonesia.

• Creating subsidiaries, which will become the access to PLN’s income.

Business Risk …

Business Competition … By giving exclusive rights to industrial areas to have theirown generators and to be able to sell their electricity production to PLN, a competi-tive arena will be created that will reduce market share and the role of PLN and itsaffiliations.

IPP (Independent Power Producers) … The production of electricity from Privateelectricity providers or Independent Power Producers that is sold to PLN based on atake or pay contract, will create a high market risk for PLN and will decrease PLN’scompetitive ability in the electricity business.

Government Policies … Government Policies that instruct PLN to become the agentand the instrument for energy diversification will place PLN in a difficult positioncompetition wise.

• Development AgentIn line with the Government Legislation No. 15/85, PLN as a development agent isinstructed to implement the program to install electricity in the villages, and toinitiate the development of electricity.

• Energy DiversificationAs the result of the government’s policy in energy, PLN as the buyer of petroleumfuel from Pertamina, becomes an instrument for energy diversification, since allof the development cost becomes part of the sale price, such that the price be-comes increasingly high. Implicitly, this means that the cost to develop energy orthe cost for energy diversification becomes the burden of PLN.



Exchange Rate Fluctuations … The domination of foreign currencies, especially theUS Dollar, is found in a major portion of PLN’s business activities, such as invest-ment, whereby imported goods become its components, the repayment of loans andinterest rates, the purchase of gas and geothermal fuels by PLN from Pertamina, thepurchase of electricity from IPP, and the payment of imported components of thespare parts used for the maintenance of PLN’s electric power facilities.

The above factors result in an adjustment in the exchange rate value of the Rupiahagainst other foreign currencies, which cannot be avoided, and the exchange ratefluctuations very much affect the profitability as well as the synergy of the company.

Fuel Supply … Around 45% of PLN’s company expenses comprise of the cost of petro-leum fuel, natural gas, coal, and geothermal fuel. The dependency of PLN on Pertamina,and the cost that result from the supply of fuel from Pertamina, can affect PLN’sproduction operation and company expenses, which eventually will affect the conti-nuity of the company as a whole.

Electric Power Losses … Electric power losses occur due to losses that occur in thenetworks and electricity theft. To cut losses that result from technical problems,repairs are carried out and distribution networks are built, which will require quite alarge amount of funds. Meanwhile, electricity theft by customers or non-customers,results in a lower income for PLN.

Environmental Effect … The public demand is especially aimed at the question of theeffect of extra high tension (500 kV) and high-tension (150 kV) transmission projectson the environment, which leads to the question of legal action and the request forcompensation. If the public’s demand is granted by the courts, PLN’s income willdecrease and project cost will increase.



Covering Annual Reports, Financial Reports, and ConsolidatedFinancial Reports, Management Report, Overview of ImportantFinancial Data, Analysis, and General Management Discussions.

Accountability Report


We, the members of the Board of Commissioners and the Board of Directors ofPT PLN (Persero) state that:1. The Annual Report of PLN for the Year 2002 includes:

a. The Financial Reportsb. The Management Reportc. An Overview of Important Financial Datad. Management Analysis and Discussions

2. The Consolidated Financial Reports of the Company as per 31st December 2002 andas per 31st December 2001 are presented in accordance to the prevailing generalaccounting principles, and both have been audited.

3. The Management Report presents open information regarding the condition and theactivities of the company during the year 2002, in comparison to the previous years.

4. The Overview of Important Financial Data presents information regarding the in-dicators of the financial condition of the company for the past 5 years.

5. The Management Analysis and Discussions discuss and analyse the financial re-ports and other information, especially those in relation to the material changesthat have occurred since the previous Annual Report.

Jakarta, May 2003

Statements from the Boardof Commissioners andthe Board of Directors

The Commissioners

Luluk SumiarsoPresident Commissioner

Yogo PratomoCommissioner

Komara DjajaCommissioner

Andung A. NitimiharjaCommissioner

Mohamad IkhsanIndependent Commissioner

The Directors

Eddie Widiono SuwondhoPresident Director

Ali Herman IbrahimDirector of Generator and Primary Energy

F. Parno IsworoDirector of Finance

Sunggu Anwar AritonangDirector of Trade and Customer Service

Herman Darnel IbrahimDirector of Transmissions and Distributions

Djuanda Nugraha IbrahimDirector of Human Resources and Organisations


The Efficiency Drive Program has succeeded in cutting the overallcost of operations, investment, and supporting functions.

Financial Report


Financial Report

Financial Report


INDEPENDENT AUDITORS’ REPORT

Financial Report


Financial Report


BASIS OF THE ENGAGEMENTAND

SCOPE OF AUDIT

Financial Report


BPK - RI/AUDITAMA V

BASIS OF THE ENGAGEMENT AND SCOPE OF AUDIT

1. Basis of the Engagement

a. The third amendment of the 1945 Constitution article 23 E, 23 F and 23 G;b. Laws of the Republic of Indonesia No. 5 Year 1973, regarding the Audit Board and other existing laws

and regulations;c. Engagement Letter of the Audit Board No.63/ST/VII-XV.1/12/2002 dated December 13, 2002, regard-

ing the engagement for the audit of PT Perusahaan Listrik Negara (Persero)’s financial statements forthe year 2002 at the Head Office and Regional Business Units.

2. Scope of Audit

This audit is a general audit of the consolidated financial statements of PT Perusahaan Listrik Negara(Persero) for the year ended December 31, 2002. The audit is conducted in accordance with the Govern-ment Auditing Standards issued by the Audit Board. This Standard requires that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free of material misstate-ment.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan-cial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statement presentation. In addition, an auditalso includes tests of the Company’s compliance with contracts, grants and certain provisions of laws andregulations as well as compliance with internal controls.

Certain provision of laws and regulations which we tested, include :a. Law No. 1 Year 1995 regarding Limited Liability Companyb. Government Regulation No. 12 year 1998 regarding Stated Owned Companiesc. Government Regulation No. 64 year 2001 regarding the Transfer of Position, Duty and Authority of the

Ministry of Finance in state owned limited liability company, Public Service Enterprise (Perum), BureauCompany (Perjan) to the Ministry of State Owned Companies

d. Decree of the President of the Republic of Indonesia No. 133 Year 2001 dated December 31, 2001regarding the Selling Price of Electricity Provided by State Owned Limited Liability Company (Persero)PT Perusahaan Listrik Negara

e. Decree of the Ministry of Energy and Mineral Sources No.3032.K/46/MEM/2001 dated December 31,2001 regarding the Implementation Rules of the Selling Price of Electricity Provided by PT PLN (Persero)

Financial Report


BPK - RI/AUDITAMA V

f. Decree of the Ministry of Energy and Mineral Sources No.2038.K/40/MEM/2001 dated August 24,2001 regarding the Connection Expense of Electricity Provided by PT PLN (Persero)

g. PT PLN (Persero)’s Articles of Associationh. Decision of the Board of Director No.038.K/920/DIR/1998 dated June 3, 1998 regarding the procure-

ment of goods and servicesi. Decision of PLN’s Board of Directors No.256.3.K/010/DIR/2001 dated December 31, 2001j. Decision of the Board of Directors No.021.K/05999/DIR/1995 dated May 23, 1995 regarding the Guide-

lines and Instructions of Customer Administrationk. Decision of the Board of Directors of PT PLN (Persero) No.078.K/010/DIR/1999 dated April 20, 1999

regarding the Amendment/Completation of the Explanations of the Board of Directors Circular LetterNo.009.A.E/82/DIR/1994 regarding the Limitation of Operating Expense and Investment Cost

l. Decision of the Board of Directors of PT PLN (Persero) No.256-8.K/010/DIR/2001 dated December31, 2001 regarding the Selling Price Regulation and Electricity Services Expense related to TDL

m. Board of Directors Circulars Letter No.010.E/012/DIR/2002 dated June 28, 2002 regarding the Flow ofFund Receipts

n. Guidelines and Accounting Policy of PT PLN (Persero)

We did not audit the financial statements of PLN’s Subsidiaries, namely PT Indonesia Power, PTPembangkitan Jawa Bali, PT Indonesia Comnets Plus, and PT PLN Batam, which are wholly owned by theCompany, which statements reflect total assets amounting to Rp93,065,948.89 million and Rp27,618,231.31million as of December 31, 2002 and 2001, respectively, and total income amounting to Rp1,496,074.41million and Rp638,407.92 million for the years then ended, respectively. The financial statements of theseSubsidiaries were audited by other independent auditors whose reports which expressed unqualified opinionhave been furnished to us and our opinion, insofar as it relates to the amounts included for these Subsidiar-ies, is based solely on the reports of the other independent auditors.

We believed that our audit provides a reasonable basis for our opinion. The audit fieldwork was conductedstarting from November 11, 2002 up to March 31, 2003.

THE AUDIT BOARD OFTHE REPUBLIC OF INDONESIA

Financial Report


FINANCIAL STATEMENTS

Financial Report


PT PERUSAHAAN LISTRIK NEGARA (PERSERO) AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In Rupiah)

Notes December 31, 2002 December 31, 2001ASSETS

NON-CURRENT ASSETS

Property, plant and equipmentCarrying value 2e, 3, 34 201,318,266,900,547 71,199,098,692,321Accumulated depreciation (15,700,329,132,406) (18,150,768,918,803)Net book value 185,617,937,768,141 53,048,329,773,518

Assets not used in operations 2f, 5 4,360,877,837,263 2,338,753,654,625Construction in progress 2g, 4 9,587,301,107,735 12,340,034,835,533Investment in shares of stock 2i, 6 289,885,727,553 32,774,557,224Deferred tax assets - net 15 10,190,872,725 20,810,898,410Other assetsNon-operational assets 2h, 7 494,305,845,507 235,915,348,361Deferred charges - net 2l, 9 402,267,576,242 328,644,214,050Other receivables 8 169,747,189,320 141,202,768,154Prepaid expenses and advance payments 10 45,105,960,039 38,297,293,970Claims for tax refund 15 27,676,382,853 18,591,874,586

Total other assets 1,139,102,953,961 762,651,499,121

Total non-current assets 201,005,296,267,378 68,543,355,218,431

CURRENT ASSETSCash and cash equivalents 2n, 11 7,218,517,205,010 6,142,460,790,375Temporary investments 12 641,463,304,515 684,669,245,639Accounts receivable

Trade – net of allowance for doubtfullaccounts of Rp 70,610,667,961in 2002 and Rp 79,914,150,481 in 2001 2m, 13 2,053,296,077,372 2,893,599,572,582

Others 8 456,113,004,034 89,740,647,814Inventories 2k, 14 2,104,458,838,627 1,394,161,798,338Prepaid taxes 15 2,012,401,825 802,159,289Prepaid expenses and advance payments 10 417,446,570,867 157,727,746,029

Total current assets 12,893,307,402,250 11,363,161,960,066

TOTAL ASSETS 213,898,603,669,628 79,906,517,178,497

Financial Report


PT PERUSAHAAN LISTRIK NEGARA (PERSERO) AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (continued)(In Rupiah)

Notes December 31, 2002 December 31, 2001STOCKHOLDERS’ EQUITY AND LIABILITIES

STOCKHOLDERS’ EQUITYCapital stock - Rp 1,000,000 nominal value per share

Authorized - 63,000,000 sharesSubscribed and fully paid - 46,107,154 shares in 2002and 46,107,154 shares in 2001 16a 46,107,154,000,000 46,107,154,000,000

Other capital 16b 18,917,340,432,152 17,571,443,391,657

Revaluation increment in property, plant and equipment 16b 137,599,980,268,685 -

Retained earnings (deficit)Appropriated 1,894,148,569,355 1,894,148,569,355Unappropriated (52,434,302,877,397) (46,374,744,670,626)

Total stockholders’ equity - net 152,084,320,392,795 19,198,001,290,386

MINORITY INTEREST IN NET ASSETS -OF CONSOLIDATED SUBSIDIARIES 3,909,507,599 -

DEFFERED INCOME - NET 2r, 17 3,998,868,453,251 3,502,133,701,213

NON-CURRENT LIABILITIES

Deferred tax liabilities - net 15 776,740,773,943 3,020,649,688,460

Long-term debts - net of current maturitiesTwo-step loans 2q, 20a 16,763,996,027,692 20,146,895,425,575Government loans 21 5,326,456,446,377 5,742,525,455,507Bank loans 18 140,319,552,645 210,308,777,000Bonds payable 19 600,000,000,000 600,000,000,000Due to independent power producers 22 7,149,588,377,537 -

Total long-term debts 29,980,360,404,251 26,699,729,658,082

Other payables 23 9,023,016,401,451 104,202,414,573

Customers’ security deposits 24 2,633,024,822,467 2,363,026,311,746

Projects payable 25 551,572,274,747 748,610,998,175

Total non-current liabilities 42,964,714,676,859 32,936,219,071,036

Financial Report


PT PERUSAHAAN LISTRIK NEGARA (PERSERO) AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (continued)(In Rupiah)

Notes December 31, 2002 December 31, 2001

CURRENT LIABILITIESAccounts payable

Trade 26 9,554,282,075,852 19,930,391,663,127Others 23 403,199,873,622 306,505,267,288

Taxes payable 15 1,038,689,238,672 108,987,000,193Accrued expenses 27 854,297,514,521 951,619,666,744Current maturities of long-term debts

Two-step loans 2q, 20b 2,509,633,306,450 2,463,201,798,509Government loans 21 416,650,631,986 439,766,497,001Bank loans 18 70,037,998,021 69,691,223,000Bonds payable 19 - -

Total current liabilities 14,846,790,639,124 24,270,163,115,862

TOTAL STOCKHOLDERS’ EQUITY AND LIABILITIES 213,898,603,669,628 79,906,517,178,497

See accompanying Notes to the Consolidated Financial Statements which are an integral part of the consolidated financial statements.

Financial Report


PT PERUSAHAAN LISTRIK NEGARA (PERSERO) AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(In Rupiah)

For The Years EndedNotes December 31, 2002 December 31, 2001

OPERATING REVENUESElectric power sales 2o, 28 39,018,461,721,493 28,275,982,649,678Connection fees 2o, 29 302,307,820,340 265,857,730,605Electricity subsidy 2p, 30 4,739,073,653,216 6,735,209,866,886Others 31 123,510,049,750 82,907,269,363

Total operating revenues 44,183,353,244,799 35,359,957,516,532

OPERATING EXPENSESFuel 2o, 32 17,957,261,628,798 14,007,295,529,403Electric power purchases 33 11,168,842,948,716 8,717,140,537,841Depreciation of property, plant and equipment 2e, 34 15,626,762,571,070 3,404,113,925,841Maintenance 35 3,588,827,620,484 2,630,359,602,830Personnel 36 2,583,289,595,495 2,086,329,980,623Others 37 1,420,607,273,725 1,094,147,262,141

Total operating expenses 52,345,591,638,288 31,939,386,838,679LOSS FROM OPERATIONS (8,162,238,393,489) 3,420,570,677,853

OTHER INCOME (CHARGES)Interest income - 665,414,275,826 363,856,350,535Interest and financing charges 39 (2,152,231,840,512) (2,619,507,159,806)Gain on foreign exchange - net 40 2,725,596,125,676 (458,948,280,287)Others - net 345,645,823,538 (139,826,909,462)

Other income (charges) - net 1,584,424,384,528 (2,854,425,999,020)

INCOME (LOSS) BEFORE TAX (6,577,814,008,961) 566,144,678,833

TAX EXPENSES 2s, 15Current (5,853,854,766) (3,222,665,833)Deferred (1,808,931,417,764) (566,197,243,723)

Total tax expenses (1,814,785,272,530) (569,419,909,556)

LOSS BEFORE EXTRAORDINARY INCOME (8,392,599,281,491) (3,275,230,723)

EXTRAORDINARY INCOME (LOSS) 41 2,333,041,074,720 183,393,988,135NET INCOME (LOSS) (6,059,558,206,771) 180,118,757,412NET INCOME (LOSS) PER SHARE (131,423) 7,967

See accompanying Notes to the Consolidated Financial Statements which are an integral part of the consolidated financial statements,

Financial Report


PT P

ER

USA

HA

AN

LIS

TR

IK N

EG

AR

A (

PER

SER

O)

AN

D S

UB

SID

IAR

IES

CO

NSO

LID

AT

ED

STA

TE

ME

NT

S O

F C

HA

NG

ES

IN S

TO

CK

HO

LD

ER

S’ E

QU

ITY

(In

Rup

iah)

For

The

Yea

rs E

nded

Dec

embe

r 31,

200

2 an

d 20

01 R

etai

ned

Earn

ings

(Def

icit)

Subs

crib

ed an

dO

ther

Stoc

khol

ders

’N

otes

Fully

Pai

dC

apita

lA

ppro

pria

ted

Una

ppro

pria

ted

Equi

ty -

Cap

ital S

tock

Net

Bal

ance

, Jan

uary

1, 2

001

17,32

5,800

,000,0

0045

,960,0

17,74

6,172

1,894

,148,

569,

355

(46,

554,

863,

428,

038)

18,6

25,1

02,8

87,4

89Re

class

ifica

tions

from

Oth

er C

apita

l28

,781

,354

,000

,000

(28,

781,

354,

000,

000)

00

0O

ther

capi

tal

039

2,779

,645,4

850

039

2,779

,645,4

85N

et In

com

e0

00

180,1

18,75

7,412

180,1

18,75

7,412

Bal

ance

, Dec

embe

r 31,

200

146

,107,1

54,00

0,000

17,57

1,443

,391,6

571,8

94,14

8,56

9,35

5(4

6,37

4,74

4,67

0,62

6)19

,198

,001

,290

,386

Oth

er ca

pita

l12

01,3

45,89

7,040

,495

00

1,345

,897,0

40,49

5Re

valu

atio

n inc

rem

ent i

n pro

perty

,pl

ant a

nd e

quip

men

t3,

16b

013

7,599

,980,2

68,68

50

013

7,599

,980,2

68,68

5N

et lo

ss0

00

(6,0

59,5

58,2

06,7

71)

(6,0

59,5

58,2

06,7

71)

Bal

ance

, Dec

embe

r 31,

200

246

,107,1

54,00

0,000

156,5

17,32

0,700

,837

1,894

,148,5

69,3

55(5

2,43

4,30

2,87

7,39

7)15

2,08

4,32

0,39

2,79

5

See a

ccom

pany

ing

Not

es to

the C

onso

lidat

ed F

inan

cial

Sta

tem

ents

whi

ch a

re a

n in

tegr

al p

art o

f the

cons

olid

ated

fina

ncia

l sta

tem

ents

.

Financial Report


PT PERUSAHAAN LISTRIK NEGARA (PERSERO) AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Rupiah)

For The Years EndedNotes December 31, 2002 December 31, 2001

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers 41,155,376,332,501 28,996,958,218,591Cash receipts for interest income and current accounts 664,089,964,992 374,133,047,948Cash payments to suppliers and employees (34,868,772,165,881) (24,792,031,301,828)Cash payments for other operating expenses (1,296,638,631,996) (1,471,103,326,246)Cash received from Government subsidy 4,404,896,667,583 6,735,209,866,886Cash receipts from operations 10,058,952,167,199 9,843,166,505,351Payments for

Interest and finance charges (2,134,652,750,479) (2,603,288,784,955)Taxes (1,318,245,048,691) (15,654,629,534)

Cash receipts for taxes (13,991,461,947) 3,639,642,868Net Cash Provided by Operating Activities 6,592,062,906,082 7,227,862,733,730

CASH FLOWS FROM INVESTING ACTIVITIES

Cash receipts from sale of property, plant and equipment 30,955,050,441 15,686,193,806Cash payments for acquisition of property, plant and equipment (2,517,779,753,367) (1,404,205,353,343)Cash payments for investment in shares of stock (257,111,170,329) (6,617,783,096)

Net Cash Used in Investing Activities (2,743,935,873,255) (1,395,136,942,633)

CASH FLOWS FROM FINANCING ACTIVITIES

Cash payments for two-step loans (2,262,793,294,713) (2,578,618,537,319)Cash payments for bonds payable (1,000,000,000,000)Cash payments for Government loans (236,800,487,145) (691,838,669,233)Cash payments for bank loans (70,092,449,334) (65,250,000,000)Cash payments for dividends (202,384,387,000)

Net Cash Provided by (Used in) Financing Activities (2,772,070,618,192) (4,335,707,206,552)

NET INCREASE IN CASH AND CASH EQUIVALENTS 1,076,056,414,635 1,497,018,584,545

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 6,142,460,790,375 4,645,442,205,830

CASH AND CASH EQUIVALENTS AT END OF YEAR 7,218,517,205,010 6,142,460,790,375

See accompanying Notes to the Consolidated Financial Statements which are an integral part of the consolidated financial statements,

Financial Report


1. GENERAL

The Company’s Establishment and Other General Information

Perusahaan Umum Listrik Negara was established in 1961 when the Government of the Republic ofIndonesia took over the Dutch’s electricity companies, among others: NV OGEM, NV ANIEM, NV GEBEOand other electricity companies.

Previously, Perusahaan Umum Listrik Negara is one of the units of the Ministry of Energy and PublicWorks. Based on the Government Regulation No. 19 year 1965, the status of Perusahaan Listrik Negarawas changed to that of a legal entity after some of the Regional Electricity Companies were granted toPerusahaan Listrik Negara.

In 1970, Perusahaan Listrik Negara was converted into a public service enterprise (Perum), based on theGovernment Regulation No. 30 year 1970. Furthermore, the status and function of Perusahaan UmumListrik Negara was amended by the Government Regulation No. 18 year 1972.

Based on the Presidential Decree No. 59/M year 1978, Perusahaan Umum Listrik Negara was put underthe supervision of the Department of Mineral and Energy.

Based on the Notarial Deed No. 169 of Sutjipto, S.H., Notary in Jakarta, dated July 30, 1994, the LimitedCompany was established under the name PT Perusahaan Listrik Negara (Persero), shorthened to PTPLN (Persero).

The deed of establishment has been approved by the Ministry of Justice in its Decision Letter No. C-2-11.519 HT.01.04.Th.94 dated August 1, 1994. Based on PT PLN (Persero)’s Articles of Association, thepurpose and objective of PLN is to engage in the business of providing electricity for the benefit of thepublic and gain profit based on the Company’s management principles.

On October 3, 1995, PT PLN (Persero) established PT PLN Pembangkitan Tenaga Listrik Jawa Bali I(PT PLN PJB I) which subsequently changed its name to PT Indonesia Power, located in Jakarta, andPT PLN Pembangkitan Tenaga Listrik Jawa Bali II (PT PLN PJB II), which subsequently changed itsname to PT PJB, located in Surabaya. Both of the subsidiaries are enggaged in electric power generation.

On October 3, 1995, PT PLN (Persero) established PT Perusahaan Listrik Nasional-Batam (PT PLN -Batam), which is located in Batam Island and engages in providing the public electricity in Batam Island,Rampang Island, Galang Island and the surrounding areas. Moreover, PT Indonesia Comnets Plus, which islocated in Jakarta and engages in the telecommunication business for the electricity sector and publicbenefit utility, was also established.

PT PLN (PERSERO) AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2002 and 2001(In Rupiah)


Financial Report


The Board of Directors and Commissioners

Year 2002

Board of Commissioners:

Based on the Decision Letter of the Ministry of State-Owned Companies No. KEP-99/M-MBU/2002 datedMay 30, 2002, the composition of the board of commissioners of PLN are as follows:

President Commissioner : Luluk SumiarsonoCommissioners : Yogo Pratomo

Komara DjajaAndung NitimiharjaMohammad Ikhsan

Directors:President Director : Eddie Widiono SuwondhoDirector of Planning : Hardiv SitumeangDirector of Marketing and Distribution : TunggonoDirector of Operations : Bambang Hermiyanto PriyadiDirector of Finance : F. Parno IsworoDirector of Human Resources and Organization : Azwani Sjech Umar

Year 2003

Based on the Decision Letter of the Ministry of State-Owned Companies No. KEP-180/M-MBU/2003 datedMarch 6, 2003, regarding the termination and appointment of the Company’s board of directors, the compositionof the board of directors of PLN is as follows:

President Director : Eddie Widiono SuwondhoDirector of Power Plant and Prime Energy : Ali Herman IbrahimDirector of Business and Customer Services : Sunggu Anwar AritonangDirector of Transmission and Distribution : Herman DarnelDirector of Finance : F. Parno IsworoDirector of Human Resources and Organization : Djuanda Nugraha Ibrahim

2. SUMMARY OF ACCOUNTING POLICIES

The summary of the Company’s accounting policies are as follows:

a. Financial Statements

The financial statements have been prepared in accordance with the generally accepted accountingprinciples and practices in Indonesia using the historical cost basis, and the amounts in the financialstatements have been rounded off and stated in full Rupiah amounts.


Financial Report


The financial statements have been prepared consistently with previous years and represent combinedbalance sheets and statements of income accounts of the Company and Subsidiaries as one business entity.

The consolidated statements of cash flows were prepared based on the direct method by classifying cashflows into operating, investing and financing activities.

b. Principles of Consolidation

The consolidated financial statements include the accounts of the Company and Subsidiaries, which theCompany directly or indirectly control through ownership of more than 50% voting rights.

Intercompany balances and transactions between the Company and Subsidiaries have been eliminated toreflect the financial position as well as the results of operations of the Company and its Subsidiaries as onebusiness entity.

c. Transactions with Related Parties

In accordance with Statement of Financial Accounting Standards (PSAK) No. 7, related party relationshipsare described as follows:(1) enterprises that, through one or more intermediaries, control, or are controlled by, or are under common

control with, the reporting enterprise (this includes holding companies, subsidiaries and fellow subsidiaries);

(2) associated companies;

(3) individuals owning, directly or indirectly, an interest in the voting rights of the reporting enterprise thatgives them significant influence over the enterprise, and close members of the family of any such indi-vidual (close members of the family of an individual are those that may be expected to influence, or beinfluenced by, that person in their dealings with the reporting enterprise);

(4) key management personnel, that is, those persons having authority and responsibility for planning, direct-ing and controlling the activities of the reporting enterprise, including board of commissioners, directorsand managers of companies and close members of the families of such individuals; and,

(5) enterprises in which a substantial interest in the voting rights is owned, directly or indirectly, by a persondescribed in (3) or (4), or over which such a person is able to exercise significant influence. This includesenterprises owned by commissioners, directors or major shareholders of the reporting enterprise andenterprises that have a member of key management in common with the reporting enterprise.


Financial Report


The nature and amount of transactions with parties wherein the Company has control or with partieswherein the Company has a special arrangements, or significant transactions, and also whether or not thetransactions are conducted under terms and conditions similar to those with third parties are disclosed in thenotes to financial statements. Transactions with state-owned enterprises and or regional-owned enterprisesare not disclosed as transactions with related parties (see Note 42).

d. Foreign Currency Transactions and Balances

The Company’s reporting currency used is Rupiah. Transactions involving foreign currencies are recordedat the rates of exchange prevailing at the time the transactions are made. At balance sheet date, monetaryassets and liabilities denominated in foreign currencies are adjusted to reflect the selling rates for assets andbuying rates for liabilities published by Bank Indonesia. The resulting gains or losses are credited or chargedto current operations, except for foreign exchange differences incurred on loans obtained to finance theacquisition and development of ongoing projects, which are capitalized as part of the cost of the relatedprojects.

e . Property, Plant, and Equipment

Property, plant, and equipment as of December 31, 2001 were revalued based on the Decision Letter of theMinistry of State-Owned Companies No. S-819/M-MBU/2002 dated December 23, 2002 regarding thePrincipal Approval of Revaluation of Property, Plant and Equipment and Decision Letter of the Ministry ofFinance of the Republic of Indonesia No. 486/KMK.03/2002 dated November 28, 2002 regarding theRevaluation of the Company’s Property, Plant and Equipment for Taxation Purposes.

The purposes of the revaluation are to reflect the real value of the Company’s assets and match expensesagainst revenues in the statements of income.

The revaluation of property, plant, and equipment as of January 1, 2002 was conducted by PT SucofindoAppraisal Utama, an independent appraiser registered in the Department of Finance.

The revaluation was conducted by using the market value or the revalued amount based on the new re-placement cost after deducting with the accumulated depreciation since the assets were acquired untilrevaluation was performed by, and considering the physical condition of those assets.

Property, plant and equipment of the Company and Subsidiaries are stated at cost or revalued amounts forcertain assets in accordance with the government regulation, less accumulated depreciation. Property, plantand equipment include spare parts which are used to ensure the continuity and stability of the power plantoperations and electric installations in producing and distributing electricity. Spare parts are depreciatedbased on the useful lives of the related property, plant and equipment.

Assets are retired or disposed if the physical condition/affectivity/economic considerations are no longerbeneficial or if there is a replacement. The carrying values of the assets retired and the related accumulateddepreciation are reclassified to assets not used in operations.


Financial Report


Property, plant and equipment (except landrights which are not depreciated) are depreciated using thestraight-line method based on the estimated economic useful lives of the assets as follows:

Useful LivesNo Type (Years)

1 Buildings 10 – 252 Power plant installations 12.5 – 253 Transmission equipment 254 Distribution equipment 10 – 255 General equipment 56 Motor vehicles and mobile equipment 57 Spare parts 10 – 258 Other equipment 10

The revalued property, plant and equipment are depreciated based on fixed percentage of revalued amountusing the useful lives which have been determined by the independent appraiser.

f. Assets not Used in Operations

This account represents property, plant and equipment which are ready for their intended use but not yetused in operations, because these assets are in the testing stage or these assets could not be used inoperations individually.

g. Construction in Progress

Construction in progress is stated at cost based on the percentage completed using the physical progress.The accumulated costs will be reclassified to the appropriate property, plant and equipment account whenthe assets are substantially completed and the assets are ready for their intended use.

Interest expense incurred on loans obtained to finance the acquisition of the assets and depreciation ex-penses of property, plant and equipment that are used for development of assets are capitalized during theirconstructions periods.

h. Non-Operational Assets

Property, plant and equipment which are temporarily not used due to technical/effectiveness/economicconditions are classified as non-operational assets. Non-operational assets are not depreciated until theyare used again. If these assets will no longer be used, these will be classified as obsolete assets which willbe disposed and stated at the lower of cost or net realizable value. The resulting gains or losses from sale ordisposal of these assets are credited or charged to current operations.

Assets which reused are classified as property, plant and equipment and depreciated again.


Financial Report


i. Investment in Shares of Stock

Investment in shares of stock wherein the Company has direct or indirect ownership interest of at least20% but not exceeding 50% is stated at cost and adjusted for the Company’s share of the earnings or lossesof the associated company in proportion to the ownership interest and reduced by dividends received(equity method).

Investment wherein the Company has an ownership interest off less than 20% is stated at cost.

If there is a permanent decline in the investment value, an allowance for impairment in value is provided.

j. Advances for Purchase of Gas

At the end of the year, the excess of amount paid to Pertamina when the actual gas usage is less than theannual minimum gas purchase quantity as stated in the gas purchase agreements with Pertamina is re-corded as advances for purchase of gas. At the end of year, the balance of this amount is evaluated andadjusted to the actual gas used on the current year.

k. Inventories

Inventories are stated at cost using the moving average method. Obsolete inventories are removed from thebooks based on its cost.

Allowance for decline in value due to damage/obsolescence is determined at 1% of the average gross amountof the beginning and ending inventories.

l. Deferred Charges

Significant expenditures incurred with beneficial periods of more than one year are deferred and amortizedusing the straight-line method over the estimated period benefited.

m. Allowance for Doubtful Accounts

To cover possible losses from uncollectible accounts receivable, the Company provides allowance fordoubtful accounts at 3% of the average balance of accounts receivable of public, state-owned compa-nies, other receivables and doubtful receivables based on the Decision Letter of the Ministry of FinanceNo. 1460/MK.04/1981 dated December 23, 1981.

n. Cash and Cash Equivalents

Cash on hand and in banks and short-term investments with original maturity period of three months or lessare classified as cash or cash equivalents.


Financial Report


o. Revenue and Expense Recognition

Revenue from sale of electricity is recognized based on the billings for electricity usage (kWh) for the month.

Expenses are recognized when incurred (accrual basis).

p. Electricity Subsidy

Electricity subsidy is intended to cover some of the Company and Subsidiaries’ expenses and recognized asincome on the accrual basis.

q. Two-Step Loans

- Two-step loans are recognized based on the Withdrawal Authorization (WA) or other equivalent docu-ments received by the Company from lenders.

- Two-step loans in Rupiah are recognized in Rupiah based on the exchange rates at the issuance of WA.Payment to the Government of the Republic of Indonesia in Rupiah is based on the amount with drawn.

Two-step loans in foreign currencies are recognized in Rupiah based on the exchange rates at theissuance of WA and adjusted at the reporting date. Payment to the Government of the Republic ofIndonesia in foreign currencies is based on the amount withdrawn.

r. Deferred Income

Connection fees received from customers are deferred and amortized at the rate of 5% per year. Feesreceived from customers for connections not yet installed are not yet recorded as income.

s . Tax Expense

Tax expense is computed based on the estimated taxable income for the year. Deferred tax income orexpense is provided to reflect the tax effects of the temporary differences between financial reporting andincome tax purposes, and accumulated fiscal losses based on PSAK No. 46 regarding “Accounting forIncome Tax”.

t. Pension Plan

The pension plan available for all of the Company’s permanent employees is a defined benefit pension plan.The Company’s contributions to the pension fund are charged to operations upon payment or when recog-nized as payable.


Financial Report


3. PROPERTY, PLANT AND EQUIPMENT

The details of property, plant and equipment as of December 31, 2002 after revaluation are as follows:

Year 2002Reclassifications/

Balance Corrections of BalanceNo. Description January 1, 2002 Additions Deductions Functions December 31, 2002

Cost

1 Land 6,939,776,910,000 45,232,492,722 5,959,724,800 (1,491,878,900) 6,977,557,799,0212 Buildings 22,289,785,500,000 326,415,465,757 14,206,629,445 3,969,094,468 22,605,963,430,7803 Power plant installations 80,084,568,632,000 1,477,756,322,823 34,009,609,452 (4,109,028,004) 81,524,206,317,3674 Transmission equipment 34,275,574,318,000 1,399,192,943,178 79,131,344,378 5,071,577,881 35,600,707,494,6815 Distribution equipment 50,649,042,954,000 1,019,049,531,634 63,089,922,885 (2,329,984,356) 51,602,672,578,3926 General equipment 1,371,992,315,000 204,556,385,246 20,161,214,355 (17,505,881,826) 1,538,881,604,065

7 Vehicles 399,954,971,000 21,918,429,094 28,046,508,262 6,933,924,000 400,760,815,8328 Spare parts 218,519,395,000 136,102,926,160 2,915,795,293 (95,506,007,985) 256,200,517,8839 Others 723,474,031,000 90,113,710,264 1,893,333,333 (378,065,404) 811,316,342,527

Total Cost 196,952,689,026,000 4,720,338,206,877 249,414,082,203 (105,346,250,127) 201,318,266,900,547

Accumulated Depreciation

1 Land2 Buildings - 1,603,370,381,079 3,366,815,172 1,029,801,674 1,601,033,367,5813 Power plant installations - 6,825,706,557,231 5,645,720,288 690,322,207 6,820,751,159,1504 Transmission equipment - 1,593,035,376,484 2,319,392,767 14,409,395,949 1,605,125,379,6665 Distribution equipment - 4,613,744,543,695 6,857,268,284 278,714,927 4,607,165,990,3386 General equipment - 562,828,762,637 16,768,801,575 4,429,093,889 550,489,054,9517 Vehicle - 189,551,368,478 7,863,462,061 7,620,402,909 189,308,309,3268 Spare parts - 72,142,009,398 100,977,263 (9,771,995,511) 62,269,036,6249 Others - 267,676,688,727 1,189,438,903 (2,300,415,054) 264,186,834,770

Total Accumulated Depreciation - 15,728,055,687,729 44,111,876,313 16,385,320,990 15,700,329,132,406

Net Book Value 196,952,689,026,000 (11,007,717,480,852) 205,302,205,890 (121,731,571,117) 185,617,937,768,141


Financial Report


The net book value of property, plant and equipment as of December 31, 2002, amounted toRp 185,617,937,768,141.00. The 2002 net book value increased as compared to the 2001 net book value whichis amounting to Rp 53,048,329,773,518.00. The increase is mainly due to the revaluation of property, plant andequipment wherein the revaluation increment amounting to Rp 137,599,980,268,685.00 is presented as “Revalu-ation Increment in Property, Plant and Equipment” under the stockholders’ equity section (see Note 16b).

Accumulated Depreciation of Property, Plant and Equipment

Due to the revaluation of property, plant and equipment as of January 1, 2002, the acquisition cost andaccumulated depreciation of the 2001 property, plant and equipment amounting to Rp 18,150,768,918,803.00each, were written-off, while the accumulated depreciation as of December 31, 2002 amounting toRp 15,700,329,132,406.00 represents depreciation expense for the current year after the revaluation ofproperty, plant and equipment.

Year 2001Reclassifications/

Balance Corrections of BalanceNo. Description January 1, 2001 Additions Deductions Functions December 31, 2001

Cost1 Land 937,465,116,493 137,651,334,631 682,246,680 (96,860,384,900) 977,593,819,5442 Buildings 8,610,983,973,469 840,838,081,170 18,672,537,331 535,939,659,290 9,969,089,176,5983 Power plant installations 28,460,924,558,669 866,482,194,184 32,412,631,305 (567,193,968,889) 28,727,800,152,6594 Transmission equipment 11,814,355,414,627 922,516,802,952 52,542,802,793 182,377,215,330 12,866,706,630,1165 Distribution equipment 14,584,258,735,642 936,017,008,084 15,348,727,879 53,820,949,083 15,558,747,964,9306 General equipment 1,892,936,224,889 104,576,969,657 13,683,167,828 (112,293,683,025) 1,871,536,343,6937 Vehicles 193,045,465,493 26,050,971,497 1,525,295,556 13,562,754,017 231,133,895,4518 Spare parts 278,117,538,422 20,880,065,962 8,739,083,330 (98,131,927,752) 192,126,593,3029 Others 689,679,970,188 111,447,651,279 10,153,392,280 13,389,886,841 804,364,116,028

Total Cost 67,461,766,997,892 3,966,461,079,416 153,739,884,982 (75,389,500,005) 71,199,098,692,321

Accumulated Depreciation1 Land2 Buildings 1,624,933,757,972 411,541,799,425 4,570,745,783 (1,337,646,933) 2,030,567,164,6813 Power plant installations 5,473,554,909,313 1,391,041,652,357 20,256,277,798 (5,209,120,085) 6,839,131,163,7874 Transmission equipment 2,095,057,104,000 541,438,248,944 38,552,349,046 2,009,449,873 2,599,952,453,7715 Distribution equipment 3,712,209,861,729 835,984,274,257 8,119,606,061 179,433,981 4,540,253,963,9066 General equipment 1,383,169,280,159 161,923,625,131 13,481,368,708 (2,059,779,563) 1,529,551,757,0197 Vehicles 154,658,460,589 20,928,235,366 1,622,388,482 (287,062,826) 173,677,244,6488 Spare parts 42,041,140,658 9,740,220,820 5,479,938,095 (3,366,717,131) 42,934,706,2529 Others 335,053,530,959 70,164,726,532 9,496,873,060 (1,020,919,693) 394,700,464,739

Total Accumulated Depreciation 14,820,678,045,381 3,442,762,782,832 101,579,547,033 (11,092,362,377) 18,150,768,918,803Net Book Value 52,641,088,952,511 523,698,296,584 52,160,337,949 (64,297,137,628) 53,048,329,773,518


Financial Report


The landrights which are used as collateral to PLN Bonds V series A, B, C year 1996 and VI series A, B,C year 1997 are as follows:- HGB No. 77, which is located in Kayu Putih, Jakarta- HGB No. 670, which is located in East Kuningan, Jakarta- HGB No. 1289, which is located in East Kuningan, Jakarta- HGB No. 348, which is located in Kota Bambu, Jakarta- HGB No. 1083, which is located in Kebayoran Baru, Jakarta- Land, which is located in Gambir, Jakarta.

These collaterals are covered in the following agreements:- The pari Pasu Security Sharing Agreement No. 101 dated May 17, 1996, by powers of attorney to

mortgage No. 103 -108 dated May 17, 1996, and Cessie Security Sharing Agreement No. 102 datedMay 17, 1996.

- The Pari Pasu Security Sharing Agreements No. 63 dated May 19, 1997, by powers of attorney tomortgage No. 65 – 70 dated May 19, 1997 and Cessie Security Sharing Agreement No. 64 dated May17, 1997.

4. CONSTRUCTION IN PROGRESSConstruction in progress consists of costs incurred in relation to the construction of electricity facilities andinfrastructure as follows:

December 31, 2002 December 31, 2001Rp Rp

- Power plant 1,921,725,991,124 2,564,575,551,417- Transmission 6,759,347,129,982 8,854,508,805,330- Distribution 895,427,811,132 824,512,870,125- Others 10,800,175,497 96,437,608,661

9,587,301,107,735 12,340,034,835,533

In this account included material PDP in relation to the construction of electricity Infrastructure as follows :


- Power plant 5,994,585,999 16,806,743,466- Transmission 581,422,600,381 672,817,714,246- Distribution 518,424,725,734 579,680,793,692- Others 122,695,132 476,140,132

1,105,964,607,246 1,269,781,391,536


Financial Report


5. ASSETS NOT USED IN OPERATIONSAs of December 31, 2002 and 2001, assets not used in operations amounted to Rp 4,360,877,837,263.00 andRp 2,338,753,654,625.00, respectively. Assets not used in operations mainly consist of transmission equip-ment.

6. INVESTMENTS IN SHARES OF STOCKThe Company has investment in shares of stock. The carrying value of these investments are as follows:


- PT Geo Dipa Energi 248,556,374,039 -- PT Prima Layanan Nasional Enjinering 3,725,000,000 -- PT Indonusa Lappi 384,161,100 -- PT Unelec Indonesia (Unindo) - -- PT Bajradaya Sentranusa 19,598,822,090 18,441,355,034- CBE Consorsium 13,821,510,324 13,983,342,190- KSO KSPM 349,860,000 -- PT Bukit Asam 3,450,000,000 -- PT Mesa Inti Kebun - 349,860,000

289,885,727,553 32,774,557,224

Further explanations regarding the investments in shares of stock are as follows:

December 31, 2002 December 31, 2001Activities Shares % Shares %

PT Geo Dipa Energi Electricity supplier 21,847,557 33.00 0 0PT Prima Layanan

Enjinering Engineering & Contribution 3,725,000 99.33 0 0PT Indonusa Lappi Electricity supplier Development stagePT Unelec Indonesia

(Unindo) Electricity support 18,340 44.36 18,340 44.36PT Bajradaya Sentranusa Electricity supplier 19,000 25.00 19,000 25.00CBE Consorsium Electricity supplier 0 0 Development stagePT Bukit Asam Coal Mining 6,000,000 1.00 - 0PT Mesa Inti Kebun Plantation 72,275 49.00 - 0


Financial Report


Investment in shares of stock at PT Geo Dipa Energi (GDE) amounting to Rp 248,556,374,039.00 consistsof cash payment amounting to Rp 218,475,570,000.00 and transfer of PLTP Dieng’s assets amounting toRp 30,080,804,039.00 which represents the revaluation of property, plant and equipment performed byPT Sucofindo Appraisal Utama.

Investment in shares of stock at PT Unelec Indonesia (Unindo) amounting to Rp 14,980,248,632.00 is basedon the Government Regulation of the Republic Indonesia No. 2/1998 dated January 7, 1998. This invest-ment is recorded using the equity method.

In 2001, the investment in shares of stock at Unindo was nil, because the Company’s accumulated equity innet loss of Unindo exceeded the carrying value of its investment. In 2002, the retained earnings of Unindostill has a negative balance.

Based on the Presidential Decree No. 47 year 1997 dated November 1, 1997 and No. 5 year 1998 datedJanuary 10, 1998, the project of PT Bajradaya Sentranusa was reviewed/postponed. This company is underdevelopment stage.

Based on the Cooperation Agreement No. 010/MOU/CDB/2000 dated January 21, 2000. PT CogindoDaya Bersama (a subsidiary of PT Indonesia Power), Bukaka and Emitraco agreed to establish a DieselPower Plant (PLTD) in Batam. During the development stage, PT Cogindo has disbursed funds amountingto Rp 13,821,510,324.00, which will be considered as paid-in capital in the company to be established.

7. NON-OPERATIONAL ASSETSDecember 31, 2002 December 31, 2001

Rp Rp

- Cost 1,227,476,037,898 948,473,837,703- Accumulated depreciation (733,170,192,391) (712,558,489,342)

494,305,845,507 235,915,348,361

Non-operational assets consist of assets which will be disposed, relocated and repaired, and PDP materialswhich will be disposed.

These assets are not depreciated. The balance of accumulated depreciation represents the accumulateddepreciation prior to the reclassification to the non-operational assets account.


Financial Report


8. OTHER RECEIVABLES


Non-current portionThird parties 557,887,868 640,485,934

Related parties- Staff housing loans and others 169,189,301,452 140,562,282,220

169,747,189,320 141,202,768,154

Current portionThird parties- Stamp duty receivables - 10,221,000- Interest receivables 3,671,977,146 1,122,945,760- Others 33,684,920,155 1,703,282,429

37,356,897,301 2,836,449,189Related parties- Staff housing loans and others 418,756,106,733 84,313,539,386- Interest receivables - 2,429,250,608- Receivables from DP-PLN - 161,408,631

418,756,106,733 86,904,198,625456,113,004,034 89,740,647,814

Dana Pensiun PT PLN (DP-PLN) has been approved by the Ministry of Finance of the Republic ofIndonesia in its Decision Letter No. KEP-284/KM-17/1997 dated May 15, 1997 and was published in theState Gazette RI No. 52 dated July 1, 1997.

The funds come from the Company’s and employees’ contributions. For the years ended 2002 and 2001,receivables from DP-PLN consist of:


- Payable of the Company’s contributions - (838,640,563)- Payable of the employee’s contributions (902,794,496) (3,044,815,830)

(902,794,496) (3,883,456,393)- Receivable from payment of pension benefits - 4,044,865,024

(902,794,496) 161,408,631

The negative balance of receivables from DP-PLN amounting to Rp 902,794,496.00 is recorded as payableto DP-PLN under account Other payables – Short – Term.


Financial Report


9. DEFERRED CHARGES

This account represents deferred charges net of accumulated amortization as follows :


Research 373,219,166,010 307,658,555,130System, procedures and others 29,048,410,232 20,985,658,920

402,267,576,242 328,644,214,050

10. PREPAID EXPENSES AND ADVANCE PAYMENTS


Non-current portionsThird parties- Rent of land, building and others 35,751,623,085 5,674,343,870

Related parties- Rent of land, building and others 9,354,336,954 32,622,950,100

45,105,960,039 38,297,293,970

Current portionsThird parties- Advance for purchase of goods 196,743,732,802 8,185,921,527- Advance for expenses and others 106,605,795,229 33,012,970,232

303,349,528,031 41,198,891,759Related parties- Advance for salaries 110,977,797,508 91,554,488,483- Advance for expenses and others 3,119,245,328 24,974,365,787

114,097,042,836 116,528,854,270417,446,570,867 157,727,746,029


Financial Report


11. CASH AND CASH EQUIVALENTS


Cash 82,587,491,934 49,299,343,275Cash in banks

PT Bank Pembangunan Daerah 35,299,760,618 36,921,495,810PT Bank Central Asia 152,791,347,747 196,710,572,839PT Pan Indonesia Bank 16,611,377,732 17,136,396,160PT Bank Bali 11,247,921,893 -PT Bank Buana 16,440,920,305 29,792,903,668PT Bank Artha Graha 29,506,424,362 23,686,309,221PT Lippo Bank 5,750,304,764 4,335,578,113PT Bank Bukopin 353,962,480,496 344,693,099,883PT Bank International Indonesia 20,727,865,426 22,612,289,841PT Bank Danamon (Inc,Ex Bank Duta Jaya Nusa etc) 100,674,574,201 8,075,034,894PT Bank Muamalat/City Bank/PTBank IFI 10,232,708,559 4,212,184,080PT Bank BNI’ 46 1,927,404,683,307 725,594,882,389PT Bank BRI 2,666,071,636,530 582,826,313,641PT Bank Mandiri 1,606,207,046,356 3,767,039,718,725PT Bank BTN 22,617,601,276 21,900,219,442PT Pos dan Giro 1,383,091,704 1,213,233,052Total Cash in Banks 6,976,929,745,276 5,786,750,231,758

Time deposits with maturity periods of less than 3 monthsPT Bank Internasional Indonesia - 6,000,000,000PT Bank BUKOPIN 44,500,000,000 209,000,000,000PT Bank Pembangunan Daerah 15,000,000,000 -PT Bank Muamalat /City Bank/PT Bank IFI 10,000,000,000 22,000,000,000PT Bank BNI’ 46 37,500,000,000 45,513,956,384PT Bank Mandiri 36,999,967,800 23,855,258,958PT Bank Indonesia - 42,000,000PT Bank BRI 15,000,000,000 -

Total Time Deposits 158,999,967,800 306,411,215,342Total Cash and Cash Equivalents 7,218,517,205,010 6,142,460,790,375

Time deposits denominated in Rupiah and foreign currencies with maturity periods of 3 months or less,earned average annual interest rates as follows :

- in Rupiah currency 12.30% - 17.87%- in Foreign currencies 2.50% - 4.59%

Cash and cash equivalents include balance in foreign currencies (see Note 43).


Financial Report


Fund Reserve from Electricity Subsidy

Current accounts in Bank Mandiri, Melawai Branch and Bank BNI 46, Kebayoran, Jakarta Branchinclude funds amounting to Rp 615,405,000,000.00 each or totaling Rp 1,230,810,000,000.00, whichrepresents reserve fund from electricity subsidy. This fund was requested by the Board of Director inits Letter No. 07563/530/DITKEU/2002 dated December 19, 2002 and has been approved by theMinistry of Finance in its Letter No. 1094/KM.3-43/SKOR/2002 dated December 27, 2002. This fundwas intended for the 2002 electricity subsidy fund, which in PLN’s calculations still has remaining balanceamounting to Rp 334,176,985,632.00, as follows:

- Subsidy requested from January to December 2002 Rp 3,206,066,985,632.00- Subsidy received as of December 31, 2002 Rp 2,871,000,000,000.00- Remaining balance of subsidy receivable as of December 31,2002 Rp 334,176,985,632.00

Up to the end of 2002, the subsidy fund amounting to Rp 1,230,810,000,000.00 is not included in the currentaccounts presented in the financial statements.

12. TEMPORARY INVESTMENTSDecember 31, 2002 December 31, 2001

Rp RpTime Deposits- PT Bank BUKOPIN 25,000,000,000 -- PT Bank Internasional Indonesia 12,682,000,000 10,000,000,000- PT Bank Muamalat 10,500,000,000 -- PT Bank Mandiri (Formerly Bank Exim) 104,837,000,000 69,656,300,000- PT Bank Negara Indonesia 108,940,000,000 135,400,000,000- PT Bank BRI 75,000,000,000 35,000,000,000

336,959,000,000 250,056,300,000Notes receivable- PT Bahana Pembinaan Usaha Indonesia 6,055,169,303 5,597,067,936- PT Dana Reksa (Persero) 298,449,135,212 429,015,877,703

304,504,304,515 434,612,945,639Total Temporary Investments 641,463,304,515 684,669,245,639

Temporary investments consist of notes receivable and time deposits in Rupiah and foreign currencies withmaturity periods of more than 3 (three) months and less than 1 (one) year and earned average annualinterest rates as follows:- In Rupiah currency 12.30% - 17.87%- In Foreign currencies 2.50% - 4.59%- Notes receivable 16.54% - 18.41%

Temporary investments include balances in foreign currencies (see Note 43).


Financial Report


13. ACCOUNTS RECEIVABLE

As of December 31, 2002, accounts receivable amounting to Rp 2,053,296,077,372.00 decreased as com-pared to the balance as of December 31 amounting to Rp 2,893,599,572,582.00.


Third parties 2,104,958,152,219 2,857,241,502,678Related parties 18,948,593,114 116,272,220,385

2,123,906,745,333 2,973,513,723,063Allowance for doubtful accounts (70,610,667,961) (79,914,150,481)

2,053,296,077,372 2,893,599,572,582

The changes in the allowance for doubtful accounts are as follows:- Balance at beginning of year (79,914,150,481) (62,134,422,014)- Additions during the year 7,682,913,872 (45,319,904,383)- Accounts receivable written-off 1,620,568,648 27,540 ,175,916

(70,610,667,961) (79,914,150,481)

Based on the Agreement No. 99 dated May 17, 1996 and No. 63 dated May 19, 1997, between PT BankMandiri (formerly BDN), the Trustee and PLN, the accounts receivable – trade are used as collateral to thePLN Bonds V series A, B, C year 1996 and PLN Bonds VI series A, B, C year 1997. These receivables arealso used as collateral to loans obtained from several banks (see Notes 18 and 19).

14. INVENTORIESDecember 31, 2002 December 31, 2001

Rp RpFuel and lubricants 1,422,116,091,181 699,727,070,155Transformers 22,101,230,855 20,975,833,142Switchgear and transmission 37,213,905,102 35,556,731,712Wire 30,704,767,519 30,196,128,079Measurement, divider and control equipment 47,788,774,518 31,899,747,626General supplies and others 562,327,920,662 587,456,069,958

2,122,252,689,837 1,405,811,580,672Allowance for inventory obsolescence (17,793,851,210) (11,649,782,334)

2,104,458,838,627 1,394,161,798,338

The changes in the allowance for inventory obsolescence are as follows:Beginning balance (11,649,782,334) (8,993,061,683)Additions - (2,976,846,200)Inventory written-off (6,144,068,876) 320,125,549Ending balance (17,793,851,210) (11,649,782,334)


Financial Report


As of December 31, 2002, inventories amounting to Rp 2,104,458,838,627.00 increased significantly ascompared to the balance as of December 31, 2001 which amounted to Rp 1,394,161,798,338.00. This iscaused by the increase in the price and volume of fuel and lubricants.

The increase in inventory volume is mainly caused by the decreasing supply of natural gas for power plantsin East Java which was replaced by fuel oil.

15. TAXATION


a. Prepayment of Income Taxes- Income tax article 22 22,500,422,309 9,955,973,813- Income tax article 23 5,175,960,544 6,863,809,336- Income tax article 25 - 1,772,091,437- Income tax article 21 - -- Value - added tax - output 2,012,401,825 802,159,289

29,688,784,678 19,394,033,875b. Taxes payable

- Income tax article 22 4,677,885,686 3,440,850,525- Income tax article 23 7,968,796,791 6,417,284,572- Income tax article 29 54,232,546,729 2,506,940,732- Value-added tax – input 28,137,517,392 78,205,548,624- Income tax article 21 15,561,137,139 13,955,803,495- Stamp duty 194,267,727 4,232,099,937- Tax on land and building - 228,472,308- Tax on revaluation increment in property, plant and equipment 927,917,087,208 -

1,038,689,238,672 108,987,000,193c. Income Tax

Tax expenses of the Company and Subsidiaries consist of :Current tax expense (5,853,854,766) 3,222,665,833- Parent company - -- Subsidiaries (5,853,854,766) 3,222,665,833Deferred income tax (1,808,931,417,764) 566,197,243,723- Parent company (1,178,074,766,727) 285,968,936,482- Subsidiaries (630,856,651,037) 280,228,307,241


Financial Report


CURRENT TAX EXPENSE

A reconciliation between loss before tax, as shown in the consolidated statements of income, and accumu-lated fiscal loss is as follows:


Loss before income tax perconsolidated statements of income (4,156,822,755,416) 750,480,243,626

Income before income tax of Subsidiaries (2,136,287,029,655) (945,682,426,296)Loss before income tax of Company (6,293,109,785,071) (195,202,182,670)Temporary differences

Amortization of electrical connection - -fee 1977-1995

Income from electrical connection fee 485,412,566,145 253,718,282,997Difference of depreciation between

commercial and fiscal (4,412,328,455,236) (973,215,732,116)Amortization of loss on foreign exchange - (233,732,339,154)

(3,926,915,889,091) (953,229,788,273)

Permanent differencesEmployees’ benefits 254,589,039,068 201,195,352,958No-deductible expenses 343,272,773,348 260,015,508,680Provision for doubtful accounts and

inventory obsolescence 343,699,844 60,155,523,868Depreciation 7,200,718,052 5,081,630,765Interest income on current accounts and

time deposits (588,593,030,332) (301,120,796,527)Total 16,813,199,980 225,327,219,744

Fiscal loss current year (10,203,212,474,182) (923,104,751,199)Last year correction from tax office - -

(10,203,212,474,182) (923,104,751,199)Compensation of fiscal loss up to last year (50,654,367,130,750) (49,991,252,104,875)Fiscal loss in 1995 not allowed

to be compensated 518,834,880,530 259,989,725,324Accumulated fiscal loss up to last year (50,135,532,250,220) (49,731,262,379,551)

Fiscal loss compensation for asset revaluationincrement in property, plant and equipment (50,135,532,250,220) (49,731,262,379,551)

Accumulated fiscal loss to be compensatedParent company (51,981,294,786,900) (50,654,367,130,750)Subsidiaries (1,883,638,129,945) (1,326,927,656,150)Consolidated (53,864,932,916,845) (51,981,294,786,900)


Financial Report


Current and deferred taxes of Subsidiaries are in accordance with the Subsidiaries’ audited financial state-ments for the years 2002 and 2001.

As of the auditors’ report date, the Tax Assessment Letter on Overpayment of Corporate Income Tax(SKPLB) for the year 2001 has not yet been issued by the tax office, while for the year 2000 incometax, the SKPLB No. 00117/406/051/2002 dated December 20, 2002 has been issued. The SKPLBstated that the accumulated fiscal loss is Rp 25,546,119,492,621.00 lower than the Company’s calculation ofRp 12,668,692,825,326.00. The overpayment of 2000 income tax amounting to Rp 876,820,106.00 from theclaims for tax refund submitted amounting to Rp 889,820,106.00 has been received by the Company in2001.

Based on the Tax Regulations in Indonesia, the companies should calculate, decide and pay the tax payable.Before January 1, 1995, the Tax Office can decide or change the tax payable within 5 years from the datethe tax is payable. The correction of the Company’s tax payable will be recorded at the time the decisionletter is received or at the time objection letter is received if the Company filed an appeal.

DEFERRED TAX

Deferred tax is computed based on the effects of temporary differences between assets and liabilities forfinancial reporting and income tax purposes.

The details of deferred tax assets and liabilities of the Company and Subsidiaries for the years endedDecember 31, 2002 and 2001 are as follows:


Parent company

Deferred tax liabilities

Installation fee 1,013,962,026,506 868,338,256,661Difference in foreign exchange - -Correction from tax office 163,322,819,854 163,322,879,854

Total 1,177,284,846,360 1,031,661,136,515Depreciation of property, plant

and equipment (4,297,183,143,221) (2,973,484,606,650)

Deferred tax liabilities

Parent company – net (3,119,898,236,861) (1,941,823,470,135)Correction of deferred tax due to

revaluation 2,973,484,606,650 - (146,413,630,211) (1,941,823,470,135)


Financial Report


Reconciliation of Tax Expense

A reconciliation of tax expense between financial reporting and income tax purposes is as follows :December 31, 2002 December 31, 2001

Rp RpLoss before tax expense

per consolidated statements of income (4,156,822,755,416) 750,480,243,626Income before tax expense – Subsidiaries (2,136,287,029,655) (945,682,426,296)Loss before tax expense – Parent company (6,293,109,785,071) (195,202,182,670)

The maximum tax rate30 % x (Rp 6,293,109,785,071) in 2002and Rp 195,202,182,670 in 2001 (1,887,932,935,521) (58,560,654,801)

Tax effects on non-deductibleincome (expense)Fiscal loss current year 704,814,208,801 276,931,425,360Employee’s benefits 76,376,711,720 60,358,605,887Non-deductible expenses 102,981,832,004 78,004,652,604Depreciation expense 2,160,215,416 1,524,489,230Interest income on current accounts and

time deposits (176,577,909,100) (90,336,238,958)Provision for doubtful accounts and

inventory obsolescence 103,109,953 18,046,657,160Correction from tax office - -

Total 709,858,168,794 344,529,591,283Tax expense of Parent Company (1,178,074,766,727) 285,968,936,482Tax expense of Subsidiaries (630,856,651,037) 280,228,307,241Tax expense-consolidated (1,808,931,417,764) 566,197,243,723


Deferred tax liabilitiesSubsidiaries – net (620,136,271,007) (1,058,015,319,916)

Deferred tax liabilitiesConsolidated (766,549,900,218) (2,999,838,790,050)

Tax Payable on Revaluation Increment in Property, Plant and Equipment

The tax payable for the revaluation increment in property, plant and equipment amounted to Rp 11,035,286,578,990.00and payment made in December 2002 amounted to Rp 1,300,052,771,211.00. The remaining balance amountingto Rp 9,735,233,807,779.00 will be paid in 5 (five) years and classified as long-term liability.


Financial Report


16. STOCKHOLDERS’ EQUITYDecember 31, 2002 December 31, 2001

Rp Rp- Subcribed and fully paid

capital stock 46,107,154,000,000 46,107,154,000,000- Other capital 18,917,340,432,152 17,571,443,391,657- Revaluation increment in property,

plant and equipment 137,599,980,268,685 -- Retained earnings (deficit) (50,540,154,308,042) (44,480,596,101,271)

Total 152,084,320,392,795 19,198,001,290,386

a. Capital StockThe Company is wholly owned by the Government of the Republic of Indonesia, represented by theMinistry of Finance.

Based on the Notarial Deed No. 169 of Sujipto, S.H. dated July 30, 1994, regarding theCompany’s establishment, which was approved by the Ministry of Justice in its Decision Let-ter No. C2-11.519.HT.01.01. Year 1994 dated August 1, 1994, the authorized capital stock amountedto Rp 63,000,000,000,000.00 divided into 63,000,000 shares, which consisted of 13,000,000 priority sharesand 50,000,000 common stock with a par value of Rp 1,000,000 per share. The subscribed and fully paidcapital stock amounted to Rp 13,000,000,000,000.00 divided into 13,000,000 priority shares.

Based on the minutes of the General Extraordinary Stockholder’s Meeting held on January 16,1998, which was notarized by Notarial Deed No. 70 dated January 27, 1998 of Indah Fatmawati,S.H. and approved by the Ministry of Justice of the Republic of Indonesia in its Decision LetterNo. C2-547.HT.01.04.TH.98 dated February 5, 1998, the stockholder agreed, among others, to:

- Change the 13,000,000 priority shares to become common shares with a par value of Rp 1,000,000.00per share.

- Increase the subscribed and fully paid capital of the Company amounting to Rp 13,000,000,000,000.00to become Rp 17,325,800,000,000.00 divided into 17,325,800 shares with a par value of Rp 1,000,000.00per share.

Based on the minutes of the General Extraordinary Stockholder’s Meeting held on July 18, 2001, whichwas notarized by Notarial Deed No. 43 of Haryanto,S.H., dated October 26, 2001 and approved by theMinistry of Justice of the Republic of Indonesia in its Decision Letter No.C-1763.HT.03.02p Th 1999dated September 8, 1999, the stockholder agreed, among others, to :

- Compensate the Government’s receivable arising from overdue interest and penalty on two-steploans amounting to Rp 15,744,405,955,300.00 and Rp 13,036,948,834,152.00, respectively, into theGovernment Equity Investment amounting to Rp 28,781,354,000,000.00 which has been approved bythe Ministry of Finance of the Republic of Indonesia in its Letter No. S-352/MK.06/2001 dated June20, 2001 and notarized by Notarial Deed No. 43 of Haryanto, SH., dated October 26, 2001.


Financial Report


- Increase the subscribed and fully paid capital of the Company of Rp 28,781,354,000,000.00 di-vided into 28,781,354 shares, which originally amounted to Rp 17,325,800,000,000.00, to becomeRp 46,107,154,000,000.00 divided into 46,107,154 shares.

- The difference between the compensation of the Government’s receivables with the increase insubscribed and fully paid capital amounting to Rp 789,452.00 is classified as other capital.

b. Other CapitalOther capital represents Government participations which were received by the Company as of Decem-ber 31, 2002 but the status have not yet been decided, the details are as follows :


- DIP Rupiah Fund 6,283,506,899,663 5,716,371,776,731- Project aid 12,180,083,089,850 12,510,820,980,428- Reclassifications from previous year - (683,936,198,209)

18,463,589,989,513 17,543,256,558,950- Financial restructuring - 789,452- Regional government aid and others 453,750,442,639 28,186,043,255- Revaluation increment in property,

plant and equipment 137,599,980,268,685 - 156,517,320,700,837 17,571,443,391,657

The computation of revaluation increment in property, plant and equipment as of December 31, 2002amounting to Rp 137,599,980,268,685 represents the difference of the increment property, plant andequipment as of January 1, 2002, after considering the following items :

Description Rp

Market Value (NP) 196,952,689,026,000Net Book Value :

Cost 73,757,151,606,162Accumulated Depreciation (20,824,502,172,704)Net Book Value (NB) 52,932,649,433,458

Revaluation Increment (NP-NB) 144,020,039,592,542Add (deduct):

Tax on revaluation (11,035,286,578,989)Compensation of deferred tax 4,048,747,010,107Correction of tax on revaluation 13,883,637,299Charged to expense (PSAK No.48) 24,487,182,567Revaluation of year 2001/2000 (Batam,Comnet) 551,457,865,485Minority interest and others (23,348,440,326)

Total (6,300,839,735,693)Revaluation Increment (Net) 137,599,980,268,685


Financial Report


17. DEFERRED INCOME

Deferred income represents amounts received from customers for electrical connections (BP) and upgrad-ing of electrical power.

Deferred income are stated at the amounts received for electrical connections less amortization which isrecognized as revenue in the statements of income.

The details of deferred income are as follows :


BP received

- Beginning balance 5,678,873,278,106 5,145,593,787,493Correction of beginning balance*) (6,963,882,647) -

- Amount received during the year 803,480,591,786 533,279,490,613 6,475,389,987,245 5,678,873,278,106

Amortization

- Beginning balance 2,176,739,576,893 1,911,142,991,855Correction of beginning balance *) (2,525,863,239) -Correction from last year - (261,145,567)

- Amortization during the year 302,307,820,340 265,857,730,605 2,476,521,533,994 2,176,739,576,893

Deferred Income (net) 3,998,868,453,251 3,502,133,701,213

*) Correction of beginning balance is to reduce the BP of Dili Branch which has been transferred to PLNHead Office as Deferred Charges and awaiting approval from the Government of RI (see Note 29).


Financial Report


18. BANK LOANSBank Loans Annual Due

(Rp) Interest Rates Dates2002

Long-term portionsPT Bank Bukopin 4,319,552,645 Interest rate of 18 % 10/08/2005PT Bank Negara Indonesia 21,000,000,000 Deposit rate of 6 months + 1.75 % 22/12/2005PT Bank Rakyat Indonesia 55,000,000,000 Deposit rate of 6 months + 2 % 28/12/2005PT Mandiri (BBD) 60,000,000,000 Deposit rate of 6 months + 2.5% 23/12/2005

140,319,552,645Short-term portions

PT Bank Bukopin 2,037,998,021 Interest rate of 18 % 31/12/2002PT Bank Negara Indonesia 10,500,000,000 Deposit rate of 6 months + 1.75 % 22/12/2002PT Bank Rakyat Indonesia 27,500,000,000 Deposit rate of 6 months + 2 % 28/12/2002PT Mandiri (BBD) 30,000,000,000 Deposit rate of 6 months + 2.5% 23/12/2002

70,037,998,021

2001

Long-term portionsPT Bank Bukopin 6,308,777,000 Interest rate of 18 % 10/08/2005PT Bank Negara Indonesia 31,500,000,000 Deposit rate of 6 months + 1.75 % 22/12/2005PT Bank Rakyat Indonesia 82,500,000,000 Deposit rate of 6 months + 2 % 28/12/2005PT Mandiri (BBD) 90,000,000,000 Deposit rate of 6 months + 2.5% 23/12/2005

210,308,777,000Short-term portions

PT Bank Bukopin 1,691,223,000 Interest rate of 18 % 31/12/2002PT Bank Negara Indonesia 10,500,000,000 Deposit rate of 6 months + 1.75 % 22/12/2001PT Bank Rakyat Indonesia 27,500,000,000 Deposit rate of 6 months + 2 % 28/12/2001PT Mandiri (BBD) 30,000,000,000 Deposit rate of 6 months + 2.5% 23/12/2001

69,691,223,000

The repayment and collaterals of the above credit facilities are as follows (see Notes 3 and 13):- Credit facility obtained from PT Bank Negara Indonesia : payment in semi-annual installments amount-

ing to Rp 5,250.00 million each and is secured by promissory notes with the same amount of semi-annualinstallments.

- Credit facility obtained from PT Bank Rakyat Indonesia: payment in semi-annual installments amountingto Rp 13,750.00 million each and is secured by accounts receivable and promissory notes.

- Credit facility obtained from PT Bank Mandiri (BBD): payment in semi-annual installments amountingto Rp 15,000.00 million each and is secured by accounts receivable-trade or land and building if theCompany cannot provide accounts receivable-trade.


Financial Report


- Credit facility obtained from Bank Bukopin amounting to Rp 8 billion for CDB, a subsidiary of PTIndonesia Power, bears annual interest rate at 18% and is secured by fiduciary guarantee of CDB’sreceivable from PT Para Bandung Propertindo amounting to Rp 2,000.00 million, receivable fromPT Indonesia Power and PT Lirik Petroleum amounting to Rp 1,000.00 million each, and several prop-erties belonging to CDB.

The loan will be paid in 44 (forty-four) installments and will be due on August 10, 2005.

For the loan facilities, the banks have not imposed special restrictions to the Company.

19. BONDS PAYABLE

DueDecember 31, 2002 December 31, 2001 Term Date

Rp RpPLN Bonds VI/1997-nominal value 600,000,000,000 600,000,000,000 10 years 08/08/2007

600,000,000,000 600,000,000,000Current maturity - -Long-term portion 600,000,000,000 600,000,000,000

The issuance of bonds was based on the Indenture Agreement between the Company and PT Bank Mandiri(formerly PT Bank Dagang Negara (Persero)), as the Trustee, the bonds are secured by several landrightsand accounts receivable. Interest on bonds is paid quarterly (see Notes 3 and 13).

PLN Bonds VI Series A, B and C Year 1997

These bonds are stated at nominal value and were issued on August 8, 1997 and will be due in 10 (ten)years.a. Bonds-Series A, bear fixed interest rate which is calculated based on the 10 (ten) years Asean Interest

Rate Swap from Reuter page EROT plus premium of 1.4%.b. Bonds-Series B, bear floating interest rate based on the average interest rates for 6 (six) months of time

deposits at PT Bank Negara Indonesia (Persero) Tbk, PT Bank Tabungan Negara (Persero), PT BankMandiri (formerly PT Bank Ekspor Impor Indonesia (Persero)), PT Bank Niaga Tbk and PT Bank BaliTbk, which are calculated for 5 (five) working days before the date of the bonds interest rate determina-tion, plus fixed premium of 1%.

c. Bonds-Series C, bear floating interest rate based on the average for 6 (six) months of IRSOR andcalculated 5 (five) working days before the date of the bonds interest rate determination, plus fixedpremium of 1.4%.


Financial Report


Interest of bonds is paid semi-annually as stated in the coupon interest. The first coupon was paid onJanuary 20, 1998. These bonds will be due on August 8, 2007.

20. TWO-STEP LOANS

This account represents long-term overseas loans of the Government of the Republic of Indonesia whichare re-loaned the Company. There are no collaterals for these loans.

a. Long-term portions

Source offunds December 31, 2002 December 31, 2001 Interest rates Periods

Rp Rp%

Rupiah

I B R D 2,200,283,084,574 2,588,901,635,876 IBRD + (0.75 - 3.25) 17 - 25A D B 2,340,966,443,232 2,518,603,242,343 ADB + (1.00 - 3.50) 18.5 - 25KFW Jerman 865,826,797,615 1,048,656,547,669 KFW + 0.75 15 - 25USAID 4,936,252,821 5,676,577,838 3 30CDC Inggris - 920,599,952 10.50 20Swiss Conf. 28,715,894,597 43,073,841,897 4.75 20US Exim Bank 96,668,456,946 130,879,954,096 7.75 or SBI + 0.75 12Japan Exim Bank 58,936,365,900 91,453,523,394 SBI + 0.75 12Meespierson NV 6,357,715,186 21,088,470,193 SBI + 0.75 9.5Gen. Bank Barclay 33,032,323,314 41,520,447,681 6.95 or SBI + 0.75 12Midland Bank 277,645,327,791 293,266,960,049 SBI + 0.75 25Kons.Bank Swiss 386,125,194,582 536,918,560,604 SBI + 0.75 12Banque Paribas 43,764,707,344 57,559,852,398 SBI + 0.75 12Roshin Int. 64,362,912,179 73,431,758,142 SBI + 0.75 10Austria 24,573,356,167 31,594,315,071 SBI + 0.75 12China 9,031,070,178 11,009,819,022 SBI + 0.75 10 6,441,225,902,426 7,494,556,106,225

U S D I B R D 4,506,186,536,125 5,394,695,867,858 IBRD + 0.35 20A D B 1,797,906,857,769 2,003,403,560,342 ADB + 0.35 20Sumisho Leasing 174,137,202,323 275,736,558,491 LIBOR + 1.05 10Nebula Leasing 374,157,080,807 521,035,635,984 LIBOR + 1.05 12Mitsui Leasing 37,671,604,475 52,586,793,539 LIBOR + 1.05 12Islamic Dev-901 38,138,234,341 64,753,775,031 7.85 7.5US Exim Bank 210,876,727,159 304,231,792,853 6.89 - 6.95 10 7,139,074,242,999 8,616,443,984,098

DEM KFW Jerman 55,382,300,895 68,247,868,494 1.1 - 2.35 12 - 25

GBP Merchant Bank 215,140,255,357 245,674,503,529 6.30 12.67


Financial Report


Source offunds December 31, 2002 December 31, 2001 Interest rates Periods

Rp Rp %

Bank Paribas 283,623,240,947 304,361,907,768 3.693 498,763,496,304 550,036,411,297

F F R Bank National 17,224,543,431 23,654,504,832 7.18 10

N L G ABN AMRO 667,849,832,688 799,127,565,095 6.95 12.75

B E F Gen. Bank Barcley 8,990,608,236 10,779,077,055 6.95 12

YEN Japan Exim Bank 1,693,328,547,458 2,342,517,060,511 4.55 - 4.65 10 - 12

A T S Austria 109,920,442,163 102,904,472,295 3.85 17 - 18.5

AU $ Efic Australia 132,236,111,092 138,628,375,673 3.85 25Total 16,763,996,027,692 20,146,895,425,575

b) Short-Term Portions

Source offunds December 31, 2002 December 31, 2001 Interest rates

Rp Rp %

Rupiah

I B R D 400,261,084,045 348,720,758,236 IBRD + (0.75 - 3.25)A D B 181,922,959,557 133,191,853,794 ADB + 91.00 - 3.50)Kuwait 697,522,556 697,522,556 4Midland Bank 17,713,114,792 2,777,396,451 SBI + 0.75KFW Jerman 209,205,228,833 193,776,393,520 KFW + 0.75USAID 42,802,462 21,082,621 3CD C Inggris 936,945,542 1,399,794,854 10.5Swiss Conf. 14,312,852,051 14,312,852,049 4.75US Exim Bank 26,800,965,125 33,902,803,931 7.75 or SBI + 0.75Japan Exim 71,305,642,511 71,305,642,501 SBI + 0.75Meespierson NV 9,064,373,224 2,119,238,397 SBI + 0.75Gen.Bank Barclay 9,437,850,080 10,387,575,793 6.95 or SBI + 0.75Kons.Bank Swiss 110,321,484,166 70,047,573,508 SBI + 0.75Baque Paribas 13,865,507,355 14,111,037,286 SBI + 0.75Roshin Int. 13,394,907,324 17,076,114,560 SBI + 0.75Austria 7,066,081,153 7,066,054,153 SBI + 0.75China 862,674,042 862,674,042 SBI + 0.75 1,087,211,994,818 921,776,368,252 U S D I B R D 275,827,318,495 372,800,421,039 IBRD + 0.35A D B 76,945,555,292 65,985,247,614 ADB + 0.35Sumisho Leasing 62,898,099,811 73,167,605,923 LIBOR + 1.05


Financial Report


Source offunds December 31, 2002 December 31, 2001 Interest rates

Rp Rp %

Nebula Leasing 102,667,478,969 119,430,215,950 LIBOR + 1.05Mitsui Leasing 11,301,480,803 13,146,697,692 LIBOR + 1.05Islamic Dev. Bank - 901 12,811,649,053 2,728,051,443 7.85US Exim 70,902,610,047 93,545,570,092 6.89 - 6.95 613,354,192,470 740,803,809,753

DEM KFW Jerman 35,261,731,285 34,230,490,944 1.1 - 2.35

GBP Merchant Bank 34,666,382,174 36,469,081,172 6.30Baque Paribus 8,056,684,193 7,903,061,339 3.693 42,723,066,367 44,372,142,511

F R F Bank Indosuez - - 6.95Bank National 6,918,318,698 6,758,428,150 7.18 6,918,318,698 6,758,428,150

N L G ABN AMRO 153,604,654,972 141,401,700,746 6.95

BEF Gen.Bank Barclay 2,012,048,219 1,956,783,099 6.95

ATS Austria 27,469,271,733 35,242,568,437 3.85

YEN Japan Exim Bank 541,078,027,888 536,659,506,617 3.85

Total 2,509,633,306,450 2,463,201,798,509

21. GOVERNMENT LOANS


Long-term portions

- Dividends Semesta Development Funds - -- Development of PLTGU Muara Tawar 103,500,000,000 126,500,000,000- Rescheduled installments of two-step loans 228,481,581,163 327,757,951,163- Financial restructuring (RDI VI) 4,994,474,865,214 5,288,267,504,344

5,326,456,446,377 5,742,525,455,507Short-term portions- Dividends Semesta Development Funds - 202,384,387,000- Development of PLTGU Muara Tawar 316,792,639,130 23,000,000,000- Rescheduled installments of two-step loans 99,857,992,856 214,382,110,001

416,650,631,986 439,766,497,001


Financial Report


Dividends/Semesta Development Funds (DPS)This represents the Company’s obligation to the Government of the Republic of Indonesia as a result ofdistribution of dividends when the Company was still a Perum. Based on the letter from the Ministry ofFinance No. S-625/MK/017/1996 dated November 18, 1996, DPS payable has been rescheduled and willbe paid in annual installments for 10 (ten) years starting from 1996/1997 up to 2005/2006. The loan is noninterest bearing.

Export Prepayment Fund for Development of PLTGU Muara TawarThis represents the loan facility obtained by the Company from the Department of Finance of the Republicof Indonesia with a maximum amount of Rp 230,000,000,000.00. This facility has a term of 12 (twelve)years which will be due on March 13, 2008. This facility bears annual interest rate at 9% for the first 6 (six)years. The seventh up to twelve installments bear interest at the rate of 3 (three) months Certificate ofBank Indonesia, 6 (six) months prior to the date of the interest rate determination.

Rescheduled Installments of Two-step LoansThis loan represents overdue principal and interest on two-step loans up to June 30, 1996 in which thepayment has been rescheduled based on a letter from the Directorate General of Financial Institution No.B-1998/MK.17/1996. The overdue principal amounting to Rp 712,342,879,333.00 will be paid in semi-an-nual installments up to July 15, 2001 and bears annual interest rate at 14.5%. The overdue interest duringgrace period amounting to Rp 801,897,742,538 will be paid annually starting from January 15, 1997 up toJuly 15, 2004.

Financial RestructuringThis loan represents the Company’s obligation to the Government/Department Finance for overdue princi-pal on two-step loans amounting to Rp 5,288,267,504,344.00 based on a letter from the Ministry of Financeof the Republic of Indonesia No. S-352/MK.06/2001 dated June 20, 2001. The loan has a term of 20(twenty) years including grace period of 2 (two) years and with administration fee of 4% per year. As ofDecember 31, 2002, the remaining balance of overdue principal amounting to Rp 4,994,474,865,214.00 willbe paid in semi-annual installments up to July 15, 2001 and bears annual interest rate at 14.5%. The overdueinterest during grace period amounting to Rp 801,897,742,538 will be paid annually starting from January 15,1997 up to July 15, 2004.

22. DUE TO INDEPENDENT POWER PRODUCERS

This account represents due to independent power producers (IPP) for arrears in electric power purchasesdetermined in the restructuring covered in the Long-Term Agreement (LTA), which became effectivesince 2002. Total long-term liabilities electric power purchases arrears arising from the restructuring amounted


Financial Report


to Rp 7,149,588,377,537.85. This amount represents the transfer of trade payable balances for electricalpurchasing from Paiton I and Paiton II.

Based on the LTA, PLN obtained a hair-cut for the outstanding balance of electric purchases arrears as ofDecember 31, 2001. Realized hair-cut are recorded as deduction of the balance, while unrealized hair-cutare not recognized as deductions and do not affect the outstanding balances of the arrears.

23. OTHER PAYABLES


Long-term portion :Third parties 9,022,668,397,016 103,861,085,693Related partiesSocial fund, education and other payables 348,004,436 341,328,880

9,023,016,401,452 104,202,414,573Short-term portion :

Third parties 369,828,667,564 273,764,676,695Related partiesEmployees and others 32,468,411,562 32,740,590,593DP-PLN 902,794,496 -

33,371,206,058 32,740,590,593403,199,873,622 306,505,267,288

24. CUSTOMERS’ SECURITY DEPOSITS

This account represents security deposits from customers which are calculated based on the connectedpower supply and the rate of electricity used. Customer deposits will be refunded, net of unpaid electricitybills, when customers stop subscribing for electricity.

25. PROJECT PAYABLES

This account represents payables to contractors/suppliers arising from purchases of goods and serviceswhich will be financed by two-step loans, but as of December 31, 2002 and 2001 the payment is still inprocess or the Withdrawal Authorization (WA) has not yet been issued.


Financial Report


26. ACCOUNTS PAYABLE-TRADE

This account represents payables arising from purchases of electricity, fuel and goods and services, asfollows :


Third parties- Independent Power Producers 5,964,961,780,246 15,900,556,184,041- Pertamina 2,249,560,706,097 1,720,291,010,733- PT Tambang Batubara Bukit Asam 331,818,070,266 381,243,515,010- Unocoal of Geothermal Indonesia,, Ltd. 156,651,533,907 1,116,923,414,913- PT Kideco Jaya Agung 101,275,058,015 53,533,241,091- PT Adaro Indonesia 96,032,918,884 168,721,655,970- PT Bukaka Teknik Utama 34,038,160,290 37,382,080,754- PT Dwipangga Sakti 30,215,580,978 34,932,309,568- PT Expan Kalimantan 27,571,686,798 56,133,939,521- PT Berau Coal 12,806,542,816 50,809,099,384- Others 517,898,464,945 386,600,797,452

9,522,830,503,242 19,907,127,248,437Related parties

- Employee Cooperative 12,786,300,059 6,446,225,816- Others 18,665,272,551 16,818,188,874

31,451,572,610 23,264,414,6909,554,282,075,852 19,930,391,663,127

Accounts payable include balances in foreign currencies (see Note 43).

Accounts payable to third parties mainly represent short-term debts to Independent Power Producers(IPP) for electric power purchases and the calculated arrears as stated in the Long Term Agreements(LTA) which amended the Power Purchase Agreements (PPA). The LTAs which effective in 2002, wereissued to determine the tariff of electric power purchases in the future and also to finalize the restructuringof overdue debts to IPP as of December 31, 2001.

Based on the restructuring of the arrears in electric power purchases, the total long-term liabilities amountedto Rp 7,149,588,377,538.00 and recorded as long-term debts under due to independent power producersaccount (see Note 22).


Financial Report


27. ACCRUED EXPENSES

This account consists of :December 31, 2002 December 31, 2001

Rp RpThird parties :

- Interest of bond payables 40,016,992,018 37,412,403,930- Accrued expenses 24,024,028,154 37,179,314,670

64,041,020,172 74,591,718,600Related parties

- Interest of two-step loans 650,694,562,512 721,676,804,869- Interest of bank loans 131,355,000 200,865,000- Interest of Government loans 93,935,258,852 99,629,443,523- Other accrued expenses 45,495,317,985 55,520,834,752

790,256,494,349 877,027,948,144854,297,514,521 951,619,666,744

Accrued expenses-interest of two-step loans include balances in foreign currencies (see Note 43).

28. ELECTRICITY SALES

Electricity sales by tariff classifications are as follows :

2002 2001Rp Rp

Group of tariff- Household 13,352,473,316,509 8,456,684,111,548- Business 7,021,370,257,141 5,149,643,177,293- Industry 16,313,884,749,707 12,872,974,817,856- Offices/Government/Public 2,330,733,398,136 1,796,680,542,981

Total 39,018,461,721,493 28,275,982,649,678

Revenue from electricity sales is calculated based on basic electricity tariff determined by the Government.


Financial Report


29. CUSTOMER CONNECTION FEES

2002 2001Rp Rp

Customer connection fees 302,307,820,340 265,857,730,605

Customer connection fees represent amortization of connection fees received from customers which havebeen installed as of December 31, 2002 and 2001 (see Note 17).

30. ELECTRICITY SUBSIDY

Electricity subsidy from the Government in 2002 of Rp 4,739,073,653,216.00 consists of the 2002electricity subsidy amounting to Rp 3,206,066,985,633.00, and 2001 electricity subsidy which was re-ceived in 2002 amounting to Rp 1,533,006,667,583.00, due to the change of subsidy recognition methodfrom cash basis to accrual basis. The Company already received the 2002 electricity subsidy amountingto Rp 2,871,890,000,000.00 from the total of Rp 3,206,066,985,633.00 and the remaining balance is waitingfor the verification from the auditor which has been appointed by the Ministry of Finance.

Electricity subsidy from the Government is recorded in the statements of income as operating revenuebecause the subsidy was given to customers below or the same with 450 VA, which selling price is underthe cost of production.

31. OTHER OPERATING REVENUE

This account consists of :2002 2001Rp Rp

- Upgrading of electrical connections 21,743,098,111 18,034,255,184- Rent of trafo 49,278,405,450 46,288,129,751- Services and others 52,488,546,189 18,584,884,428

Total 123,510,049,750 82,907,269,363

Services and others mainly consist of revenue from other operating revenues of Subsidiaries.


Financial Report


32. FUEL AND LUBRICANTS2002 2001Rp Rp

Fuel Oil- H S D 6,507,147,686,674 3,135,079,254,586- I D O 54,178,602,278 24,157,048,647- Residu / M F O 2,592,903,757,935 1,179,892,176,670- Others 17,284,371,429 14,280,955,247

9,171,514,418,316 4,353,409,435,150Non-Fuel Oil- Natural gas 4,533,183,365,958 5,801,689,790,285- Coal 3,088,502,087,194 2,798,124,987,378- Geothermal 959,081,399,811 884,311,441,979- Lubricants 173,015,861,836 152,942,715,927- Water 31,964,495,683 16,817,158,684

8,785,747,210,482 9,653,886,094,253 17,957,261,628,798 14,007,295,529,403

33. ELECTRICITY PURCHASES

This account represents purchases of electricity from the Independent Power Producers (IPP) with thedetails as follows :

2002 2001Rp Rp

Purchases/Rents from PT Paiton Energy Company 4,170,286,830,910 2,865,376,736,887PT Jawa Power 4,003,251,012,731 2,126,513,911,076PT Unocal (UGI) 840,525,662,705 1,295,691,221,559PT Magma Nusantara 756,040,817,485 805,712,839,981PT Energi Sengkang 415,062,453,332 483,574,288,802PT Makassar Power 143,755,268,909 137,115,040,654PT Cikarang Listrindo 247,401,995,235 519,525,301,191PO Jatiluhur and others 127,298,511,784 90,516,578,907PT Amoseas (Drajat) 200,629,258,336 276,989,309,045Geodipa 20,383,986,603 -Rents of generator 244,207,150,686 116,125,309,739 11,168,842,948,716 8,717,140,537,841

Since 2002, electric power purchases from independent power producers are based on the tariff stated inthe Long-Term Agreements (LTA) which amended the Power Purchase Agreements (PPA).


Financial Report


34. DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT

2002 2001Rp Rp

15,626,762,571,070 3,404,113,925,841

Depreciation expenses in 2002 increased significantly as compared to the balance in 2001 due to the revalu-ation of property, plant and equipment as of January 1, 2002.

35. MAINTENANCE EXPENSES

This account represents spare parts usage and contractor fees for maintenance purposes. Maintenanceexpenses for the years ended 2002 and 2001 amounted to Rp 3,588,827,620,484 and Rp 2,630,359,602,830,respectively.

36. PERSONNEL

The details of personnel expenses are as follows :2002 2001Rp Rp

Salaries and wages 931,901,357,266 842,232,791,518Housing, transportation and TKK 587,219,219,431 379,953,355,018Other benefits 598,110,585,926 503,737,996,901Religious and production benefits 333,894,703,198 263,254,854,143Company’s contributions and THT 132,163,729,674 97,150,983,043

2,583,289,595,495 2,086,329,980,623

Personnel expenses in 2002 amounting to Rp 496,959,614,872 increased as compared to the balance of 2001.

37. OTHER OPERATING EXPENSES

This account consists of :2002 2001Rp Rp

- Data processing and billing expenses 236,392,122,197 187,115,314,031- Meals 81,228,469,694 57,674,293,357- Transportation 179,836,620,746 124,121,970,131- Postage, telephone and telegram 60,043,646,776 60,020,551,870- Gas, electricity and water 98,002,561,213 75,891,016,198- Rent of buildings/land and others 55,247,320,586 37,992,358,466- Stationeries 69,974,721,386 65,906,158,964


Financial Report


2002 2001Rp Rp

- Printed materials 67,833,381,063 79,279,560,085- Insurance 110,631,900,849 44,408,664,178- Others 461,416,529,215 361,737,374,861

1,420,607,273,725 1,094,147,262,141

38. OTHER INCOME (CHARGES)2002 2001Rp Rp

- Services income 44,093,049,058 35,231,042,023- Penalty income - opal 752,978,006 5,425,195,073- PPJU premium 18,541,760,116 4,786,689,590- PFK income 15,114,763,683 12,685,055,140- Penalty on delay in billing payment 109,418,431,106 78,936,314,811- Other penalties 22,947,305,076 4,925,189,165- Receipt of receivables which have been written-off 652,178,040 1,046,932,899- Gain on sale of property, plant and equipment 30,955,050,441 16,348,663,716- BBM differences (5,296,112,744) (1,886,651,745)- Research and development (12,583,958,062) (87,935,840,922)- Lost on property, plant and equipment written off (78,220,416,316) (106,498,403,840)- Loss on materials written-off (8,451,062,843) (18,351,039,179)- Amortization of deferred charges (4,779,256,133) (2,359,217,572)- Other income ( charges ) 212,582,698,406 (82,175,838,621)

345,645,823,538 (139,821,909,462)

39. INTEREST AND FINANCING CHARGES

This account represents financing cost charged to income/loss of current period with details as follows :

2002 2001Rp Rp

- Two-step loans 1,808,793,028,318 2,042,989,258,129- Penalty (20,536,894,110) 75,537,123,508

1,788,256,134,208 2,118,526,381,637- Bank loans 47,167,177,637 63,959,319,916- Government loans 221,887,316,894 238,879,954,217- Bonds 89,930,798,988 198,141,504,036- Independent power producers 4,990,412,785 -

363,975,706,304 500,980,778,169 2,152,231,840,512 2,619,507,159,806


Financial Report


40. GAIN (LOSS) ON FOREIGN EXCHANGE

This account represents gain (loss) on foreign currency transactions and adjustments on foreign exchangerates for 2002 and 2001. At the end of year, assets and liabilities denominated in foreign currencies areadjusted using the selling rates for liabilities and buying rates for assets. For December 31, 2002 and 2001,the Company used the exchange rates published by Bank Indonesia (Rp 8,895 for buying rate and Rp 8,985for selling rate in 2002 and Rp 9,547 for buying rate and Rp 9,643 for selling rate in 2001).

41. EXTRAORDINARY INCOME (LOSS)

2002 2001Rp Rp

2,333,041,074,720 183,393,988,135

In 2002, the Company has extraordinary income arising from the hair-cut of PLN’s payables as a result ofthe renegotiation with independent power producers as follows :- Gunung Salak and Unocal 1,2,3 – UGI amounting to Rp 1,178,733,030,225.00- Independent Power Producers (IPP) Unocal 4,5,6 amounting to Rp 1,154,308,044,495.00

42. RELATED PARTY TRANSACTIONS

In the normal course of business, the Company and its Subsidiaries entered into certain transactions withrelated parties as follows (see Note 2c):

a. Employees

The Company and its Subsidiaries granted non-interest bearing housing loans to their employees. Theoutstanding receivables arising from these transactions are presented as part of “Accounts Receivable-Others” in the consolidated balance sheets.

b. PLN Pension Fund

Dana Pensiun PLN was established to manage the fund contribution of employees and the Companyand the payment of the retirement benefits of the Company and Subsidiaries ‘employees’.

c. Employees’ Cooperative

Transactions between the Company and Employees’ Cooperative (Koperasi Karyawan) mainly consistof car rentals, collections of electricity bills, payment of car insurance and building and yard maintenanceservices.


Financial Report


43. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

December 31, 2002 December 31, 2001 Amount in foreign Equipment in Amount in foreign Equivalent in

CRY currencies Rupiah currencies RupiahASSETS

Cash and cash equivalents CHF 809,633.22 5,191,157,731 801,355.99 5,001,062,406 EUR 6,897,588.08 64,292,901,286 - - GBP 10,833.87 154,495,970 306,038.31 4,639,094,028 JPY 346,294,041.05 25,972,053,079 58,213,345.72 4,631,896,207 USD 25,241,498.37 225,872,897,187 22,181,403.84 231,543,298,315 321,483,505,253 245,815,350,956 Temporary investments EURO 38,665.12 353,321,903 USD 500,000.00 4,470,000,000 3,078,341.96 31,919,752,384 4,470,000,000 32,273,074,287 Other receivables USD 234,715.40 2,098,355,676 234,715.40 2,441,040,160

TOTAL ASSETS 328,051,860,929 280,529,465,403LIABILITIES

Accrued expenses ATS 64,819.45 44,364,931 - -Interest on two-step loans AUD 533,094.23 2,762,313,073 636,634.35 3,398,914,398 BEF 595,872.70 139,117,271 790,455.75 181,030,175 DEM 5,973.02 28,762,421 - -

FRF 836,148.33 1,200,522,576 - - GBP 336,193.46 4,844,292,250 1,476,070.27 22,375,070,300 JPY 620,633,809.18 47,038,332,905 613,625,992.35 48,824,747,509 NLG 1,161,706.64 4,964,830,247 6,633,896.13 27,811,150,050 USD 22,878,866.99 205,566,619,919 25,257,468.97 263,991,065,673 266,589,155,593 366,581,978,105Two-step loans ATS 200,733,448.87 137,389,713,896 205,762,732.14 138,147,040,732 AUD 25,520,028.54 132,236,111,093 25,965,815.99 138,628,375,673 BEF 47,127,021.77 11,002,656,455 55,610,253.05 12,735,860,154 DEM 18,823,827.94 90,644,032,180 21,694,740.18 102,478,359,438 FRF 16,815,188.89 24,142,862,129 21,593,959.80 30,412,932,982 GBP 37,579,120.25 541,486,562,671 39,212,783.94 594,408,553,808 JPY 29,481,237,503.05 2,234,406,575,346 36,185,288,573.84 2,879,176,567,128 NLG 192,209,820.79 821,454,487,659 224,347,915.32 940,529,265,841 CAD USD 862,818,968.89 7,752,428,435,469 895,259,069.45 9,357,247,793,851 11,745,191,436,898 14,193,764,749,607Project payables ATS 28,847,118.41 19,744,121,723 40,904,289.15 27,462,730,693(loan in process) EURO 1,188,162.11 11,190,205,762 247,170.50 2,283,489,608 SFR 3,645,299.45 23,617,676,417 3,866,156.23 24,127,714,492 CAD 222,273.32 1,267,549,181 335,338.64 2,206,042,010 CHF 307,356.26 1,991,342,767 879,402.67 5,488,132,240 DEM 1,804,739.48 8,690,524,457 25,655,079.01 121,185,613,986 FRF 35,945,797.94 51,610,257,762 43,568,516.22 61,361,898,245 GBP 1,629,494.41 24,286,375,697 1,706,833.36 25,873,101,772 ITL 11,948,770.99 58,071,027 0 0 JPY 1,604,045,906.30 121,570,639,238 1,600,818,167.16 127,373,259,597 NGL 3,407,031.18 14,560,765,456 3,407,032.48 14,283,234,137 USD 23,458,332.03 210,773,113,257 27,964,304.77 292,282,913,490 489,360,642,744 703,928,130,270Accounts payable USD 1,415,067,840.90 12,709,692,483,837 1,505,999,213.80 15,917,297,796,644 12,709,692,483,837 15,917,297,796,644

TOTAL LIABILITIES 25,210,833,719,072 31,181,572,654,626


Financial Report


44. BUSINESS SEGMENT INFORMATION

The summary of the financial statements of the Company’s group is as follows :

December 31, 2002 (in million Rupiah)

PT PLN PT IND PT PJB PT PLN PT ICON Consolidated Total-(Parent) POWER BATAM PLUS Elimination net

Total assets 213,658,782 52,373,409 39,313,316 1,268,168 111,055 (92,826,127) 213,898,603Total liabilities 57,280,349 9,650,877 6,428,386 596,808 38,710 (16,183,625) 57,811,505Total operating income 40,635,834 11,928,710 9,976,535 361,042 31,354 (23,404,080) 39,529,395Income (loss) from operations (13,638,247) 1,517,677 785,543 14,368 1,202 (1,496,741) (12,816,198)Net income (loss) (6,059,558) 943,448 529,972 22,392 263 (1,496,075) (6,059,558)

December 31, 2001 (in million Rupiah)

PT PLN PT IND PT PJB PT PLN PT ICON Consolidated Total-(Parent) POWER BATAM PLUS Elimination net

Total assets 80,958,026 15,443,549 10,631,706 866,273 5,688 (29,909,112) 77,996,130Total liabilities 58,251,698 6,863,247 4,595,265 359,992 135 14,182,811 55,768,453Total operating income 22,826,161 6,825,045 5,156,568 41,482 1,108 (12,293,701) 22,556,663Income (loss) from operations (6,266,885) 1,415,923 611,171 (14,468) (22) (404,877) (4,659,158)Net income (loss) (25,563,095) 358,245 56,182 (10,134) 53 404,346 (25,563,095)

45. SIGNIFICANT COMMITMENTS

a. The Company entered into fuel supply agreements, with details as follows :1) Coal

Suppliers Contract No. Total (tons) PeriodsPT Adaro Indonesia 055.PJ/061//1996 5,400 2000 - 2002PT Multi Harapan Utama 059,PJ/061//1996 576,000 2000 - 2002PT Benala COAL Mining 060,PJ/061//1996 1,020,000 2000 - 2002PT Batubara Bukit Asam 020,PJ/9220/PJB I/1997 20,100,000 1997 - 2002PT Allied Indo Coal 041,A,PJNP/9220/1997/M 850,000 1997 - 2001PT Jorong Barutama Greaston 050,PJNP/9212/1997/M 1,940,000 1999 - 2004

2) Gas

Sector Suppliers No. Agreements Periods Quantity (BSCF)

Muara Karang and Tjg Priok Pertamina 055PJ/9221/199 1994-2004 1,045.33Gresik Pertamina/Arco PJ-291/PST/89 1993-2012 1,392.00Gresik Pertamina/Kodeco PJ.246/PST/87 1994-2004 158.40Paya Pasir Belawan Pertamina PJB.175/PST/88 1987-2001 262.50


Financial Report


b. The Company entered into electricity power purchase agreements with independent power producers asfollows :

1) Commenced Operations

No Company’s Name Name of Projects Fuel Capacity AF**) Purchases Periods(MW) (%)

1. PT Cikarang Listrindo Cikarang - West Java G a s 150 72 0 1996 - 20162. PT Energi Sengkang Sengkang - South Sulawesi G a s 135 80 5 6 1997/1998-

2028/20313. PT Nusamba UNOCAL Salak - West Java Geothermal 165 85 0 1997/1998-

2028/20314. PT Makasar Power Co. Pare-pare, South Sulawesi MFO/Gas 60 80 0 1998-20165. PT Paiton Energy Co. Paiton I - East Java Coal 1,230 83 0 1998-20186. PT Jawa Power Paiton II – East Java Coal 1,220 80 0 2000-2028/20307. PT. Prasarana Nusantara Drajat, West Java Geothermal 275 95 2000-2030/2040

Jaya Chevron. Texaco 8 PT Magma Nusantara, Ltd Wayang Windu, West Java Geothermal 220 100 1998/1999-

2008/2029 Total 3,455

2) Not yet in Operations

No Company’s Name Name of Projects FuelCapacity AF

Minimum Periods(MW) (%)

1 PT Tenaga Listrik Amurang *) Amurang-North Sulawesi Coal 110 80 0 1998-20282 PT Daya Listrik Pratama Cilegon – West Java Coal 400 80 0 -3 PT Tenaga Listrik Sibolga *) Sibolga-North Sumatera Coal 200 80 0 1998-20284 PT CEPA Indonesia Tanjung Jati B-Middle Java Coal 1,320 80 0 2000-20305 PT Asrigita Prasarana *) Sulawesi Gas 130 80 56 1999-20196 PT East Jawa Power Pasuruan-East Java Gas 500 85 56 -7 PT Pandanwangi Sekartaji,

California energy Bedugul-Bali Geothermal 220 95 0 1998-20288 PT Yala Teknosa

Geothema *) Cibumi-West Java Geothermal 10 80 0 1998-20289 PT Himpuma California Dieng-Middle Java Geothermal 150 100 1996/2000-

Energy Ltd *) 2026/203010 PT Lakota Trimas Bina

Energy, Asia Power *) Kamojang-West Java Geothermal 60 60 0 1998-202811 Karaha Bodas Co, LLC Karaha-West Java Geothermal 220 100 0 1998-202812 Patuha Power Ltd Patuha-West Java Geothermal 220 100 0 1998/202813 PT Parama Nusamba 1998/2001-

UNOCAL*) Sarulla-North Sumatera Geothermal 330 80 0 2029/203214 PT Dizamantra Powerindo 1999/2002-

Enserch *) Sibayak N-Sumatera Geothermal 120 95 0 2029/203215 PT Bajradaya Sentanusa *) Asahan I-North Sumatera Water 180 1175 **) 0 2000/203016 PT Power Jawa Barat Serang-West Java Coal 450 83 0 2000-203017 PT CEPA Insonesia *) Tanjung Jati C-Middle Java 1,320 80 0 2003-2033

Total 5,940


Financial Report


Description :*) Periods based on contracts

**) AF = Power supplier factor which should be absorbed by the Company***) In GWh

The Company has also power purchase agreements with small scale independent power producers. Basedon the Presidential Decree No. 5 year 1998 dated January 10, 1998, 17 of the other 24 IPPs above will bereviewed/postponed. Management is of the opinion that the postponement of these projects will not affectthe national electricity needs.

c) Development and Management of the Company’s Waste

On May 6, 1996, the Company entered into cooperative agreements with third parties regarding the deve-lopment and management of the waste factories for several PLTP. These agreements will end in 30 yearsafter the PLTPs are operated. The Company has a commitment to provide the location of the factories,waste and electricity as needed. Moreover, the Company has an obligation to provide utilities during theconstruction period and when the factories are operated. All of the operational expenses of the developmentof the factories are paid by third parties. If the factories are already operating and producing, the Companycan make available its capital.

d) Development and Establishment of Power Plants

The Company has several Memorandum of Understanding regarding the development and establishment ofpower plants. Several analytical studies are ongoing and if the results are beneficial, the cooperative agree-ments will be made.

In the short term, the Company do not anticipate the possibility of significant commitments in those analyti-cal studies.

e) As of December 31, 2002, the Company has Bank Guarantee facilities (stand by letter of credit) as follows:

Issuing bank Facilities amount Due date

PT Bank Mandiri (Eks. BDN) US$ 223,399,000 March 31, 2002PT Bank Negara Indonesia US$ 232,505,000 March 31, 2002

These facilities are used as guarantees for the payment of gas to Pertamina by the Subsidiaries.

Annual Report 2002

Documents

Transcript of Annual Report 2002