PLN has gone through the year 2008 safely under a dynamic operating circumstance which was marked by the turbulences of crude fuel oil price which peaked up to $147/bbl in July 2008 and the emergence of global financial crisis which lead to weakness of Rupiah against USD. In year 2008, PLN’s income from operations reached IDR3.6 trillion and EBITDA was IDR15.8 trillion, which served as an evidence of PLN’s capability to increase its revenues consistently.

The revenue from sale of electricity was reported to increase by 10.4% in year 2008 compared to that of the previous year. This was inline with the increase in kWh sales to 129.0 TWh or 6.4% growth compared to that in year 2007. Government’s electricity subsidy was recorded IDR78.6 Trillion or higher 114% compared to year 2007. This was mainly due to the impact of increased fuel oil price which increased our fuel expenses substantially. The significant increase of Government’s electricity subsidy from IDR36.6 Trillion in the year 2007 was a proof of continuous strong government support to PLN, as a consequence of carrying public service obligation (PSO) under the Law number 19 year 2003.

Electricity purchase Electricity purchase cost in year 2008 increased by 22.4% to IDR20.7 trillion from IDR16.9 trillion in year 2007, mainly due to the Rupiah depreciation against US Dollar.

Fuel and lubricants Fuel and lubricants costs in year 2008 increased by 64.4% to IDR107.8 Trillion from IDR65.6 Trillion in year 2007. This was mainly due to the increase on market crude oil prices. Maintenance expenses increased by 4.8% to IDR7.6 Trillion in year 2008 from IDR7.2 in year 2007, mainly due to the Rupiah depreciation against US Dollar. Personnel expenses increased by 18.1% to IDR8.3 trillion in year 2008 from IDR7.0 in year 2007, mainly due to annual salary adjustment. Depreciation expenses increased by 6.1% to IDR11.3 trillion in year 2008 from IDR10.7 trillion, principally from the impact of increasing of assets. EBITDA increased by 13.4% to IDR15.8 trillion in year 2008.

Assets, equities and liabilities

— As at December 31, 2008, PLN total assets reached IDR290.7 Trillion or 6.31% higher year on year. This was mainly due to the higher construction in progress related to the 10.000 MW projects which were still in construction stage.

— Equity decreased to IDR126.9 Trillion in year 2008 from Rp136.4 Trillion in year 2007. This was mainly due to net loss which increased by 117.9% to IDR12.3 Trillion.

— Non current liabilities increased to IDR123.1 Trillion from IDR96.8 Trillion in year 2007 due to the increase of two-step loans, lease liability and bank loans.

— Current liabilities were IDR40.6 Trillion or an increase of 0.9% compared to previous year of IDR40.2 Trillion.

Cash flow

— Net cash flow provided by operating activities decreased 53.9% to IDR7.7 Trillion from IDR16.8 Trillion in year 2007. Cash paid to suppliers is a main contributing factor contributes to decreasing of cash generated from operation. Actual cash paid to suppliers was IDR128.6 Trillion or 195.7% compared to previous year. The cash of government subsidy received increased to IDR64.7 Trillion or 330.2% compared to that of the previous year.

— Net cash flow used in investing activities increased by 5.7% compared to year 2007. Mainly due to increase in fixed assets and construction in progress.

— Net cash provided by financing activities was IDR4.2 Trillion, or decreased by 40.6% compared to previous year of IDRIDR7.1 Trillion.

— The decrease of net cash provided by operating and financing activities and also increase of net cash used in investing activities had caused cash and equivalent cash at end of year to be IDR6.3 Trillion or decrease 60.8% compared to previous year of IDR16.2 Trillion.

Cash flow

— Net cash flow provided by operating activities decreased 53.9% to IDR7.7 Trillion from IDR16.8 Trillion in year 2007. Cash paid to suppliers is a main contributing factor contributes to decreasing of cash generated from operation. Actual cash paid to suppliers was IDR128.6 Trillion or 195.7% compared to previous year. The cash of government subsidy received increased to IDR64.7 Trillion or 330.2% compared to that of the previous year.

— Net cash flow used in investing activities increased by 5.7% compared to year 2007. Mainly due to increase in fixed assets and construction in progress.

— Net cash provided by financing activities was IDR4.2 Trillion, or decreased by 40.6% compared to previous year of IDRIDR7.1 Trillion.

— The decrease of net cash provided by operating and financing activities and also increase of net cash used in investing activities had caused cash and equivalent cash at end of year to be IDR6.3 Trillion or decrease 60.8% compared to previous year of IDR16.2 Trillion.

Network losses Actual network losses in 2008 were 10.46% or decrease by 0.61% compared to previous year of 11.07%. This operating performance improvement was due to the efficacy of losses reduction programs such as bill issuance for illegal electrification for public roads to the local government, additional collection for less-billed kWh and improvement of quality of network voltage.

SAIDI and SAIFI The electricity quality is measured by a quality standard, which is a technical limitation set out in every region pursuant to local condition. The reliability rate is measured by SAIDI (System Average Interruption Duration Index) and SAIFI (System Average Interruption Frequency Index) indicators. SAIDI in 2008 was reported at 4,853 Min/Customer/Year or increased 179.6% compared to previous year of 1,736 Min/Customer/Year. While SAIFI in 2008 was reported at 13.3 Times/Customer/Year or 4.4% increase compared to previous year. This SAIDI/SAIFI performance was due to the wide shutdown in North Sumatera because of lack of electricity supply capacity.