Corrupt-ridden PLN in good hands
Former communications and information minister Rudiantara will, once again, grab the power to lead corrupt-ridden state-owned electricity company as its CEO. Once serving as PLN deputy CEO, Rudiantara has a better chance to make the state utility company healthier to ensure a reliable electricity supply for the country.
Cabinet Secretary Pramono Anung confirmed on Monday that the final assessment team, led directly by President Joko “Jokowi” Widodo, had agreed to appoint Rudiantara to the top post at PLN.1 Rudiantara reportedly bested the other two contenders, namely current PLN acting president director Sirpeni Inten Cahyani and PLN Maluku and Papua business director Ahmad Rofik. (see What we’ve heard)
Rudiantara, who was considered to be a successful communications and information minister, has a stellar career in corporations, serving as directors in various companies in different industries including telecommunications, railways, the cement industry and electricity. He was deputy CEO of PLN for five years from 2008. He resigned from his position without clear explanation, only saying that he had accomplished his professional duties. Now, he will come back to PLN as its CEO.
But he would meet huge challenges at PLN. First, he would need to speed up the development of power plants to generate an additional 35,000 megawatts (MW) of electricity nationwide, a program launched by President Jokowi in 2014, which was supposed to be completed in 2019, and has now been extended to 2028 (See What’s more).
Equally challenging is realizing the government target to increase the role of renewable energy as the country’s energy source to 23 percent by 2025. Many consider this target unattainable since the majority of the power plants that constitute the 35,000 MW will still use coal as their fuel.2
Most challenging of all is to manage the internal affairs of PLN, which has a total debt of over Rp 400 trillion and needs an annual operating capital of around Rp 80 trillion to Rp 90 trillion, a figure much higher than the budget of the Communications and Information Ministry which he used to lead.3
If not careful in managing the huge amount of money, Rudiantara could follow in the footsteps of his predecessors and become another victim of corruption in PLN. Four out of the last five PLN CEOs faced legal problems because of corruption, and three ended up in prison. They are Sofyan Basir (2014-2019), Nur Pamudji (2011-2014), Dahlan Iskan (2009), and Eddhie Widiono (2001-2008). Only Dahlan Iskan managed to avoid prison after he won a pre-trial motion in the South Jakarta District Court.
President Jokowi set a target to provide additional electricity supply of 35,000 MW during his first term. Of the total, 70 percent would come from privately owned independent power producers. The target is based on the assumption of annual economic growth between 6 and 7 percent, which would result in an increase of electricity consumption of at least 7,000 MW annually, or 35,000 MW within five years.4
PLN acting president director Sirpeni Inten Cahyani told House of Representatives Commission VII in a hearing on Monday that only 11 percent of the 35,000 MW target had been realized as of October. Meanwhile, several power plants with a combined capacity of 23,130 MW, or 65 percent of the target, are still under construction. The others are still in earlier stages. Because of such slow progress, the government has decided to extend the deadline to 2028.
Energy and Mineral Resources Ministry electricity director general Rida Mulyana blamed lower-than-estimated economic growth for the project’s sluggish progress. In the period between 2014 and 2018, the country’s GDP only grew 5.03 percent on average, lower than the expected rate of at least 6 percent. Slower economic growth, in turn, yields slower increase in demand for electricity.
In addition to weak demand, Sripeni acknowledged that many technical difficulties faced by contractors and a lack of available transmission lines had slowed down development of power plants.
Two weeks before State-Owned Enterprises (SOE) Minister Erick Thohir brought the name of Rudiantara to President Jokowi, presidential office deputy chief of staff Darmawan Prasodjo had emerged as the strongest candidate for PLN president director.
Several sources in the government said Coordinating Maritime Affairs and Investment Minister Luhut Panjaitan promoted Darmawan to Jokowi and argued that Darmawan would be suitable to lead PLN. Even the Indonesian Democratic Party of Struggle (PDI-P), whom Darmawan is affiliated with, agreed to Luhut’s proposition. And President Jokowi was said to approve the proposal.
However, a source at the SOE Ministry said Minister Erick Thohir did not like the idea of Darmawan leading PLN since he had no experience in leading a big company like PLN. Instead, Erick proposed Rudiantara directly to Jokowi, while suggesting that Darmawan be appointed as PLN vice president director. Erick argued that Rudiantara would be a better candidate because first of all, he had the experience of leading PLN as deputy CEO and secondly he had a vast network both in the government and businesses that would be helpful for him to reform PLN. Jokowi agreed with Erick’s proposal.
Erick’s nomination of Rudiantara also got support from Finance Minister Sri Mulyani, who according to another source, proposed Eximbank president director Sinthya Roesly as a candidate for the position. The SOE Ministry proposed that Sinthya be appointed PLN finance director.
After the lobbying, Erick sent a recommendation letter to the President on Nov. 22. In the letter, he proposed three candidates: Rudiantara, PLN acting president director Sirpeni and PLN business director for Maluku and Papua Ahmad Rofik. According to a source at the SOE Ministry, Erick deliberately excluded Darmawan in the letter so that Jokowi would not change his mind. President Jokowi, Energy and Mineral Resources Minister Arifin Tasrif and Cabinet Secretary Pramono Anung – all sitting in the final assessment team – agreed to appoint Rudiantara PLN president director.
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