GOVT APPROVES PLN`S BUSINESS MARGIN FOR 2010

Jakarta, June 23 (ANTARA) - The government has agreed to sanction state electricity company PT PLN's business margin of 2 percent or about Rp3 trillion to calculate electricity subsidy for 2010, an Energy and Mineral Resources Ministry official said.

The new margin had been adjusted to the capacity of the state's finances, the ministry's director general of electricity and energy utilization, J Purwono, said here on Tuesday.

The government had set PLN's business margin for this year at 1 percent or about Rp1.5 trillion.

Purnomo said the government would soon discuss the PLN's business margin for 2010 with the House of Representatives (DPR)'s budget committee for endorsement.

He said the PLN's business margin would be included in the component of electricity subsidy.

"The government does not want PLN to suffer losses and that it provides electricity subisidy. The subsidy includes the business margin," he said.

In addition to the capacity of the state's finances, the 2010 business margin was also based on the company's normal operations and the people's purchasing power, he said.

Earlier, PLN proposed a 3 percent business margin to calculate electricity subsidy for 2010.

PLN President Director Fahmi Mochtar said the rise in business margin was needed to shore up market confidence in the company's plan to issue global bonds.

This year PLN proposed a 1 percent business margin with budget allocations for electricity subsidy projected at Rp42.46 trillion. ***