Dahlan Takes Helm of Indonesia's Electric Utility

Media mogul Dahlan Iskan officially took over as president director of state utility company PT Perusahaan Listrik Negara on Wednesday, vowing to accelerate the conversion of its power plants from diesel fuel to natural gas.

Speaking after Dahlan’s inauguration, State-Owned Enterprises Minister Mustafa Abubakar said he had set six goals for Dahlan in his first year. The goals were to reduce operational and production costs; lift the level of electrification in Indonesia; improve financial performance; optimize procurement; minimize electricity losses; and secure financing for PLN’s 10,000 megawatt project.

“Dahlan has signed the performance contract that has specific targets and timelines,” Mustafa said.

“We will evaluate his work, whether he achieves these targets or not, within a year.”

However, Jacobus Purwono, director general of electricity at the Energy Ministry, said Dahlan’s performance would be evaluated mainly on whether he could solve the power crisis that has plagued Greater Jakarta in recent months and led to Dahlan’s predecessor, Fahmi Mochtar, losing his job.

Dahlan said the conversion from diesel to natural gas would boost PLN’s gas consumption by 1.7 percent by the end of next year.

The plan to use more gas has the support of upstream oil and gas regulator BPMigas, Mustafa said.

However, Pri Agung Rakhmanto, an energy analyst from the Reforminer Institute, said government efforts to secure enough domestic gas for PLN would be difficult because gas producers could get higher prices by exporting the gas.

Both Dahlan and Mustafa said there were no immediate plans for a power price increase in 2010.

Dahlan said he was also planning to implement a prepaid power scheme in more than 100 cities that would see consumers pay for electricity in a similar fashion to buying credit on a prepaid mobile phone.

The prepaid scheme would also cause consumers to be more efficient in how they use power, Dahlan said.

Golkar lawmaker Airlangga Hartato said the main problem being encountered by PLN was a lack of financing.

“As long as PLN gets enough financing to expand its network, the power shortage problem will be solved,” he said.

Opposition to Dahlan’s appointment among PLN workers was high. The company’s labor union claimed Dahlan’s appointment was politically motivated, because he was a strong supporter of President Susilo Bambang Yudhoyono and had played a major part in his re-election campaign.

A union plan to block the ninth floor of PLN headquarters, where the president director’s office is located, before the inauguration ceremony was thwarted by security guards.

After the inauguration ceremony, a number of workers made their presence felt by holding up placards rejecting Dahlan as the new president director.

Dahlan said he thought the workers were underestimating him. He said the workers were probably unaware that he has six years of experience in the electricity industry. “I have sufficient experience,” he said.

Six of PLN’s eight directors were also replaced.