1q 2007 financial statements

PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE-MONTH PERIODS ENDED

MARCH 31, 2007 AND 2006 (UNAUDITED) AND INDEPENDENT ACCOUNTANTS’ REPORT

PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA AND ITS SUBSIDIARIES TABLE OF CONTENTS

Page

DIRECTORS’ STATEMENT LETTER INDEPENDENT ACCOUNTANTS’ REPORT 1

CONSOLIDATED FINANCIAL STATEMENTS – As of March 31, 2007 and

2006 (unaudited) and for the three-month periods then ended

Consolidated Balance Sheets 2

Consolidated Statements of Income 4

Consolidated Statements of Changes in Equity 5

Consolidated Statements of Cash Flows 6

Notes to Consolidated Financial Statements 8

Independent Accountants’ Report No. 120607 PLN KS SR The Stockholders, Board of Commissioners and Directors PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA

We have reviewed the accompanying consolidated balance sheets of Perusahaan Perseroan (Persero) PT Perusahaan Listrik Negara and its subsidiaries as of March 31, 2007 and 2006, and the related consolidated statements of income, changes in equity, and cash flows for the three-month periods then ended. These consolidated financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with the standards established by the Indonesian Institute of Accountants. A review of financial statements consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with accounting principles generally accepted in Indonesia. As discussed in Note 38 to the consolidated financial statements, the Company recognized revenue from electricity subsidy on accrual basis which was computed in accordance with provisions of the Rule of the Ministry of Finance of the Republic of Indonesia No. 126/PMK.02/2006 dated December 15, 2006 amounting to Rp 6,775,461 million in 2007 and Rp 5,146,212 million in 2006. The final amount of electricity subsidy in a budget year is based on the result of the compliance audit of the usage of the electricity subsidy. The final amount of the electricity subsidy could be different from the amount of electricity subsidy which had been recognized as revenue by the Company. As discussed in Note 35 to the consolidated financial statements, the Company and its subsidiaries had an obligation to pay interest on final income tax payable on the revaluation increment on property, plant and equipment. Accordingly, the Company and its subsidiaries have accrued interest expense amounting to Rp 465,939 million for the three-month period ended March 31, 2006. Subsequently, the interest was assumed by the Government of Indonesia on December 28, 2006, and the Company has recognized as income. OSMAN RAMLI SATRIO & REKAN Kasner Sirumapea, BAP License No. 03.1.0839 June 12, 2007

The accompanying consolidated financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than those in Indonesia. The standards, procedures and practices to review and audit such consolidated financial statements are those generally accepted and applied in Indonesia.

PERUSAHAAN PERSEROAN (PERSERO)

PT PERUSAHAAN LISTRIK NEGARA AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2007 AND 2006 (UNAUDITED)

(Figures in tables stated in millions of Rupiah)

Notes 2007 2006

ASSETS

NONCURRENT ASSETS

Property, plant and equipment - net of accumulated

depreciation of Rp 60,036,440 million in 2007 and

Rp 49,785,039 million in 2006 2e,4,27,28 198,642,265 175,764,209

Construction in progress 2f,5 11,282,691 19,792,767

Long-term investments 2h,6 599,089 402,444

Deferred tax assets 2w,47 57,939 8,435

Assets not used in operations 2g,7 974,548 2,187,631

Receivables from related parties 8,50 1,230,403 1,050,547

Restricted cash in banks and time deposits 9,27 4,544,493 1,585,765

Other noncurrent assets 2i,2j,2u,10,49 1,331,000 2,217,670

Total Noncurrent Assets 218,662,428 203,009,468

CURRENT ASSETS

Cash and cash equivalents 2k,11 16,925,944 8,527,102

Short-term investments 2h,12 1,061,980 901,752

Trade accounts receivable - net of allowance for doubtful

accounts of Rp 321,567 million in 2007 and

Rp 348,034 million in 2006 2l,13,29 2,594,928 2,043,414

Receivables on electricity subsidy 14,38 11,162,298 8,806,526

Other receivables 15 208,347 191,294

Inventories - net of allowance for decline in value of

Rp 46,402 million in 2007 and Rp 36,265 million in 2006 2m,16 4,650,302 3,727,419

Prepaid taxes 17,47 193,335 365,888

Prepaid expenses and advances 2j,2u,18,49 702,667 700,380

Total Current Assets 37,499,801 25,263,775

TOTAL ASSETS 256,162,229 228,273,243

See accompanying notes to consolidated financial statements

which are an integral part of the consolidated financial statements.

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CONSOLIDATED BALANCE SHEETS

MARCH 31, 2007 AND 2006 (UNAUDITED)

(Figures in tables stated in millions of Rupiah) - Continued

Notes 2007 2006

LIABILITIES AND EQUITY

EQUITY Capital stock - par value of Rp 1 million per share

Authorized - 63,000,000 sharesSubscribed and fully paid - 46,107,154 shares 19,26 46,107,154 46,107,154

Additional paid-in capital 20,26 26,018,533 24,064,398Revaluation increment on property, plant and equipment 2e,4,21 77,640,558 77,640,558Difference due to changes in equity of subsidiaries 2b,22 59,915,695 59,915,695Retained earnings (deficit)

Appropriated 1,894,149 1,894,149Unappropriated (72,438,750) (68,607,844)

Total Equity 139,137,339 141,014,110

NONCURRENT LIABILITIES Deferred revenue 2p,23 6,357,826 5,969,338Customers' security deposits 24 4,172,296 3,874,492Deferred tax liabilities 2w,47 7,571,971 5,847,605Long-term liabilities - net of current maturities

Two-step loans 2o,25 12,705,538 12,826,451Government loans 26 3,672,408 3,989,200Lease liability 2e,27 13,541,363 -Bank loans 28 23,504 -Bonds payable 2q,29 12,877,074 2,091,279Electricity purchase payable 2t,30,33,53 6,714,961 6,820,115Employee benefit obligations 2u,49 11,952,436 11,028,989Other payables 34,50 438,397 707,857

Payable to related parties 31 133,167 91,110Project cost payable 2o,32 1,116,490 370,666

Total Noncurrent Liabilities 81,277,431 53,617,102

CURRENT LIABILITIES Trade accounts payable

Related parties 33,50,53 213,637 68,416Third parties 33,53 25,880,861 24,798,490

Taxes payable 2w,35,45,47 1,195,717 3,138,008Accrued expenses 36 1,802,196 847,584Current maturities of long-term liabilities

Two-step loans 2o,25 1,828,112 2,011,401Government loans 26 316,793 316,793Lease liability 2e,27 775,084 -Bank loans 28 13,982 4,267Bonds payable 2q,29 600,000 -Electricity purchase payable 2t,30,33,53 376,322 140,909Employee benefit obligations 2u,49 1,258,519 1,145,016Other payables 34 1,486,236 1,171,147

Total Current Liabilities 35,747,459 33,642,031

TOTAL EQUITY AND LIABILITIES 256,162,229 228,273,243



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CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)


Notes 2007 2006

REVENUES

Sale of electricity 2r,37 18,120,851 16,838,059

Customer connection fees 2p,23 131,119 122,449

Government subsidy 2s,38 6,775,461 5,146,212

Others 39 176,211 126,276

Total Revenues 25,203,642 22,232,996

OPERATING EXPENSES

Fuel and lubricants 40 13,714,596 12,876,430

Purchased electricity 41,50 4,088,627 3,691,180

Maintenance 42 1,122,100 982,388

Personnel 43,49 1,585,489 1,355,090

Depreciation 2e,4 2,656,369 2,504,655

Others 44 861,170 715,528

Total Operating Expenses 24,028,351 22,125,271

INCOME FROM OPERATIONS 1,175,291 107,725

OTHER INCOME (CHARGES)

Interest income 8,9,11,12 175,713 112,581

Interest expense and financing charges 45 (1,181,250) (823,266)

Gain (loss) on foreign exchange - net 2d,51 (570,108) 2,367,039

Others - net 46 (35,454) (42,772)

Other Income (Charges) - Net (1,611,099) 1,613,582

INCOME (LOSS) BEFORE TAX (435,808) 1,721,307

TAX EXPENSE 2w,47 (415,316) (669,381)

NET INCOME (LOSS) (851,124) 1,051,926

BASIC EARNINGS (LOSS) PER SHARE 2x,48

(In full Rupiah amount) (18,460) 22,815



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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



Revaluation

increment on Difference due to

Paid-up capital Additional property, plant and changes in equity Retained earnings (deficit)

Note stock paid-in capital equipment of subsidiaries Appropriated Unappropriated Total equity

Balance as of January 1, 2006 46,107,154 23,855,892 77,640,558 59,915,695 1,894,149 (69,659,770) 139,753,678

Additions during the period 20 - 208,506 - - - - 208,506

Net income for the period - - - - - 1,051,926 1,051,926

Balance as of March 31, 2006 46,107,154 24,064,398 77,640,558 59,915,695 1,894,149 (68,607,844) 141,014,110

Balance as of January 1, 2007 46,107,154 25,868,016 77,640,558 59,915,695 1,894,149 (71,587,626) 139,837,946

Additions during the period 20 - 150,517 - - - - 150,517

Net loss for the period - - - - - (851,124) (851,124)

Balance as of March 31, 2007 46,107,154 26,018,533 77,640,558 59,915,695 1,894,149 (72,438,750) 139,137,339



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CONSOLIDATED STATEMENTS OF CASH FLOWS



2007 2006

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers 18,556,132 17,443,830

Cash paid to suppliers and employees (12,941,810) (9,677,197)

Cash paid for other operations (79,695) (246,730)

Cash generated from operations 5,534,627 7,519,903

Government subsidy received 2,874,372 -

Interest expense paid (660,367) (542,693)

Interest received 149,783 105,337

Income tax paid (883,107) (546,574)

Payment of taxes on revaluation increment of property, plant and

equipment - (300,000)

Net Cash Provided by Operating Activities 7,015,308 6,235,973

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property, plant and equipment, construction in progress and

assets not used in operations (334,944) (886,658)

Decrease in receivables from related parties (44,316) (5,847)

Acquisition of long-term investments (3,750) (45,741)

Payment of payable on investment in shares of stock (18,600) (5,750)

Proceeds from sale of property, plant and equipment 11,084 695

Proceeds from sale of long-term investments 1,892 -

Increase in short-term investments (79,615) (471,906)

Net Cash Used in Investing Activities (468,249) (1,415,207)

CASH FLOWS FROM FINANCING ACTIVITIES

Payment of two-step loans (634,787) (788,624)

Payment of Government loans (158,396) (158,397)

Proceeds from bank loans 9,100 2,236

Payment of bank loans (7,992) -

Payment of electricity purchase payable (398,447) (69,686)

Payment of payable on acquisition of property, plant and

equipment (30,016) (22,884)

Payment of notes payable - (190,000)

Net Cash Used in Financing Activities (1,220,538) (1,227,355)

NET INCREASE IN CASH AND CASH EQUIVALENTS 5,326,521 3,593,411

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,968,420 5,361,749

Increase in restricted cash in bank (1,368,997) (428,058)

CASH AND CASH EQUIVALENTS AT END OF PERIOD 16,925,944 8,527,102



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CONSOLIDATED STATEMENTS OF CASH FLOWS


(Figures in tables stated in millions of Rupiah) - Continued

2007 2006

SUPPLEMENTAL DISCLOSURES

Noncash investing and financing activities :

Acquisition of property, plant and equipment, construction

in progress and asset not used in operating through :

Drawdown of loans and project cost payable 108,927 115,068

Government equity participation 150,517 208,506

Capitalization of borrowing costs 30,023 49,933

Capitalization of depreciation expense 2,666 2,742

Other payables 46,116 21,380

Reclassification of short-term investments to

restricted time deposits - 983,000

Conversion of receivables from related parties into

investment in shares of stock - 160,000



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PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED) (Figures in tables stated in millions of Rupiah)

1. GENERAL

a. Establishment and General Information Perusahaan Perseroan (Persero) PT Perusahaan Listrik Negara (the Company) was established in 1961 as a unit of the Ministry of Energy and Public Works. The Company is a business continuation of several Dutch electricity companies taken over by the Government of the Republic of Indonesia. The Dutch electricity companies include among others: NV ANIEM, NV SEM, NV OJEM, NV EMS, NV EMBALOM, NV GEBEO, NV OGEM and NV WEMI. Based on Government Regulation No. 19 year 1965, the Company’s status was changed to that of a legal entity. Subsequently, based on Government Regulation No. 30 year 1970, as amended by Government Regulation No. 18 year 1972, the Company became a Perusahaan Umum (Perum). Based on notarial deed of Sutjipto, SH, No. 169 dated July 30, 1994, the Company’s status was changed to a limited liability company and was named Perusahaan Perseroan PT Perusahaan Listrik Negara or PT PLN (Persero). This change was approved by the Minister of Justice in his decision letter No. C2-11.519.HT.01.01.Th.94 dated August 1, 1994 and was published in State Gazette of the Republic of Indonesia No. 73 dated September 13, 1994, Supplement No. 6731. The articles of association of the Company have been recently amended by notarial deed No. 54 dated September 15, 2006 of Imas Fatimah S.H., concerning the change of the period of service of the Company’s Directors and Commissioners and the authority of the President Director to conform with laws, and regulation and authorized institution. This change was approved by the Minister of Law and Human Rights of the Republic of Indonesia in his decision letter No. W7-02391 HT.01.04-TH.2007 dated March 9, 2007. In accordance with article 3 of the Company’s articles of association, the scope of its activities is mainly to provide the public with electricity. These activities include the construction of power plants, transmission and distribution facilities, undertaking electricity power support business and conduct of special assignments through the direction of the stockholders. In addition, the Company is allowed to enter into agreements with other electricity power producers as well as to make investments in other business entities.

The Company is domiciled in Jakarta, with 40 business unit offices spread all over Indonesia. The Company’s head office is located at Jl. Trunojoyo Blok M I No. 135, Jakarta. Based on Law No. 19 year 2003, regarding “State-Owned Enterprises (BUMN)”, the Government is obliged to provide compensation to these BUMN which were appointed to perform special assignment, for all expenses which they have incurred, including expected return (margin). The Company is a BUMN, which performs a special assignment of providing electricity power with subsidy to the public (Note 38).

b. Public Offering of Bonds of the Company

On October 16, 2006, Majapahit Holding B.V., Netherlands, a wholly-owned special-purpose subsidiary of the Company, issued Guaranteed Notes with aggregate principal amounts of US$ 450 million, interest rate of 7.25% per annum, terms of 5 years due in 2011 and US$ 550 million, interest rate of 7.75% per annum, terms of 10 years due in 2016. These Guaranteed Notes are listed on the Singapore Exchange Securities Trading Limited (Note 3). On June 21, 2006, the Company issued PLN VIII Bonds Year 2006 with total nominal value of Rp 2,200,100 million consisting of Series A bonds with nominal value of Rp 1,335,100 million, terms of 10 years due in 2016 and fixed interest rate of 13.60% per annum; and Series B bonds with nominal value of Rp 865,000 million, terms of 15 years due in 2021 and fixed interest rate of 13.75% per annum. The Company also issued Syariah Ijarah PLN I Bonds Year 2006 with nominal value of Rp 200,000 million, terms of 10 years and due in 2016. These bonds were listed on the Surabaya Stock Exchange on June 22, 2006.

PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED) (Figures in tables stated in millions of Rupiah) - Continued

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On November 11, 2004, the Company issued 150,000 PLN VII Bonds Year 2004 with nominal value of Rp 1.5 trillion, terms of 10 years due in 2014, and fixed interest rate of 12.25% per annum. These bonds were listed on the Surabaya Stock Exchange on November 12, 2004. On August 11, 1997, the Company issued 1,400 PLN VI Bonds Year 1997, consisting of Series A, Series B and Series C bonds with total nominal value of Rp 600 million, terms of 10 years due in 2007 and with both fixed and floating interest rates. These bonds were listed on Surabaya Stock Exchange on August 12, 1997. The Company also issued PLN I Bonds Year 1992, PLN II Bonds Year 1993, PLN III Bonds Year 1995, PLN IV Bonds Year 1995 and PLN V Bonds Year 1996. These bonds were fully paid.

c. Employees, Directors and Commissioners At March 31, 2007 and 2006, the Company’s management consisted of the following: March 31, 2007 March 31, 2006 President Commissioner : Alhilal Hamdi Alhilal Hamdi Commissioners : Isnuwardianto Isnuwardianto Komara Djaja Komara Djaja Independent Commissioners : Bambang Permadi

Soemantri Brodjonegoro Bambang Permadi

Soemantri Brodjonegoro Lutfi Hamid Lutfi Hamid President Director : Eddie Widiono Suwondho Eddie Widiono Suwondho Director of Generation and Primary Energy : Ali Herman Ibrahim Ali Herman Ibrahim Director of Commerce and Customer Services : Sunggu Anwar Aritonang Sunggu Anwar Aritonang Director of Transmision and Distribution : Herman Darnel Herman Darnel Director of Finance : F. Parno Isworo F. Parno Isworo Director of Human Resources and Organization : Djuanda Nugraha Ibrahim Djuanda Nugraha Ibrahim Audit Committee Chairman : Lutfi Hamid Bambang PS Brodjonegoro Members : Bambang PS Brodjonegoro Komara Djaja Maman Suparman Lalu Rusmiady Erman Jaya Kusuma Setio Anggoro Dewo Elok Tresnaningsih Devy S. Nazahar Lalu Rusmiady -

Starting May 3, 2006, Ali Herman Ibrahim and Eddie Widiono Suwondho were hindered in performing their respective roles. On July 4, 2006, Ali Herman Ibrahim was able to perform his duties again as the Director of Generation and Primary Energy while on September 4, 2006, Eddie Widiono Suwondho took up again his role as the President Director. Total compensation of the Company’s commissioners and directors including salaries, facilities and allowances, amounted to Rp 1,203 million in 2007 and Rp 1,089 million in 2006. At March 31, 2007 and 2006, the Company and its subsidiaries had total number of employees of 46,676 and 46,369, respectively.


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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Consolidated Financial Statement Presentation

The consolidated financial statements have been prepared using accounting principles and reporting practices generally accepted in Indonesia. Such consolidated financial statements are an English translation of the Company and its subsidiaries’ statutory report in Indonesia, and are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and reporting practices generally accepted in other countries and jurisdictions.

The consolidated financial statements, except for the consolidated statements of cash flows, are prepared under the accrual basis of accounting. The reporting currency used in the preparation of the consolidated financial statements is the Indonesian Rupiah, while the measurement basis used is the historical cost, except for certain accounts which are measured on the bases described in the related accounting policies.

The consolidated statements of cash flows are prepared using the direct method with classifications of cash flows into operating, investing and financing activities.

b. Principles of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries (including special purpose entities). Control is achieved where the Company has the power to govern the financial and operating policies of the investee entity so as to obtain benefits from its activities. Control is presumed to exist when the Company owns directly or indirectly through subsidiaries, more than 50% of the voting rights, except where control on the subsidiary is intended to be temporary or the subsidiary operates under severe long-term restrictions which significantly impair its ability to transfer fund to the Company.

The results of subsidiaries acquired or disposed of during the period are included in the consolidated statements of income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Intercompany balances and transactions, including unrealized gains or losses on intercompany transactions, are eliminated to reflect the financial position and the results of operations of the Company and its subsidiaries as one business entity. Changes in the value of investments due to changes in the equity of subsidiaries arising from capital transactions of such subsidiaries with other parties are recognized in equity as “difference due to changes in equity of subsidiaries”, and recognized as income or expenses in the period when the investments are disposed of.

c. Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in Indonesia requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could be different from these estimates.


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d. Foreign Currency Transactions and Translation

The books of accounts of the Company and its subsidiaries, except for Majapahit Holding B.V. (MH) and Majapahit Finance B.V. (MF) are maintained in Indonesian Rupiah. Transactions during the year involving foreign currencies are recorded at the rates of exchange prevailing at the time the transactions are made. At balance sheet date, monetary assets and liabilities denominated in foreign currencies are adjusted to reflect the rates of exchange prevailing at that date. The resulting gains or losses are credited or charged to current operations, except those foreign exchange differences which are capitalized as borrowing costs. Operating activities of MH and MF are an integral part of the Company’s activities, hence the books of accounts of MH and MF, which are maintained in foreign currency, are translated into Rupiah using the same procedures adopted by the Company.

e. Property, Plant and Equipment

Direct Acquisition Property, plant and equipment - direct acquisitions, except land, are stated at cost or revalued amounts less accumulated depreciation. Property, plant and equipment include spare parts which are used to ensure the continuity and stability of the power plant operations and electricity installations necessary to produce and distribute electricity. Property, plant and equipment acquired before 2002 were revalued in accordance with Government regulation. Revaluation increment on property, plant and equipment was credited to a separate account under equity.

Property, plant and equipment, except land, are depreciated using the straight-line method based on their estimated economic useful lives as follows:

Years Buildings, reservoir and infrastructure 10 – 47 Installations and power plant 13 – 30 Transmission equipment 37 Distribution equipment 15 – 37 General equipment 4 – 8 Motor vehicles 3 – 5 Spare parts 10 – 25 Telecommunications and data processing equipment 5 – 10

Land is stated at cost or revalued amount and is not depreciated.

The cost of maintenance and repairs is charged to operations as incurred; expenditures which extend the useful life of the asset or result in increased future economic benefits such as increase in capacity and improvement in the quality of output or standard of performance are capitalized. When assets are retired or otherwise disposed of, their carrying values and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the current operations.


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Leases

Lease transactions are recorded as capital leases when all of the following criteria are met :

1) The lessee has the option to purchase the leased asset at the end of the lease term at a price mutually agreed upon at the inception of the lease agreement.

2) All periodic lease payments made by the lessee plus residual value shall represent a return of

the cost of leased asset and interest thereon as the profit of the lessor.

3) Minimum lease period is two years.

Lease transactions that do not meet the above criteria are recorded as operating leases.

Leased assets and lease liabilities under the capital lease method are recorded at the present value of the total installments plus residual value (option price). Leased assets are depreciated using the same method and estimated useful lives used for directly acquired property, plant and equipment.

f. Construction in Progress

Construction in progress represents costs directly related to the construction of property, plant and equipment. Construction in progress is stated at cost, which includes borrowing costs during construction on debt incurred to finance the construction and depreciation of property and equipment that were used in the construction. Construction in progress is transferred to the respective property, plant and equipment account when completed and ready for use.

g. Assets Not Used In Operations

This account comprised of property, plant and equipment which are temporarily not used in operations and assets which are held for disposal. Assets not used in operations are not depreciated until these assets are used and held in service again. Assets for disposal are stated at the lower of carrying amount or net realizable value.

h. Investments

Investments in associated companies

An associate is an entity over which the Company and its subsidiaries are in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee.

The assets and liabilities and results of operations of associates are incorporated in these consolidated financial statements using the equity method of accounting. Investments in associates are carried in the consolidated balance sheet at cost as adjusted by post-acquisition changes in the Company and its subsidiaries’ share of the net assets of the associate, less any impairment in the value of the individual investments. Losses of the associates in excess of the Company and its subsidiaries’ interest in those associates are not recognized except if the Company and its subsidiaries have incurred obligations or made payments on behalf of the associates to satisfy obligations of the associates that the Company and its subsidiaries have guaranteed, in which case, additional losses are recognized to the extent of such obligations or payments.


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Other investments Investments in shares of stock with ownership interest of less than 20% that do not have readily determinable fair values and are intended for long-term investments are stated at cost. The carrying amount of the investments is written down to recognize a permanent decline in the value of the individual investments. Any such write-down is charged directly to current operations. Time deposits Time deposits with maturities of three months or less which are pledged as loan collateral and time deposits with maturities of more than three months that are realizable within one year from balance sheet date are presented as short-term investments and are stated at their nominal values.

i. Deferred Charges Costs of software and legal processing of landrights are deferred and amortized using the straight-line method over their beneficial periods.

j. Prepaid Expenses

Prepaid expenses are amortized over their beneficial periods using the straight-line method.

k. Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and in banks and all unrestricted investments with maturities of three months or less from the date of placement.

l. Accounts Receivable

Accounts receivable are stated at their nominal value less allowance for doubtful accounts. Allowance for doubtful accounts is provided based on a review of the status of the individual receivable accounts at the end of the period. Receivable is written off when the account is determined to be uncollectible.

The Company provides a general allowance for doubtful accounts at 3% of the balance of certain accounts receivable. Receivables from disconnected customers are provided 50% allowance for doubtful accounts, after applying the security deposits of the customers.

m. Inventories

Inventories are stated at cost or net realizable value, whichever is lower. Cost is determined using the moving average method.

n. Impairment of Assets

When the carrying amount of an asset exceeds its estimated recoverable amount, the asset is written down to its estimated recoverable amount, which is determined as the higher of net selling price or value in use. Impairment of asset is recognized as loss on impairment of asset which is charged to current operations.

o. Two-step Loans Two-step loans are recognized once the Withdrawal Authorization (WA) or other equivalent documents are received by the Company from the lenders. Two-step loans are recorded and paid at the amounts of drawdown or its equivalent in Rupiah if the drawdown is made in foreign currencies.


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p. Deferred Revenue Connection fees received from customers are deferred and amortized at the rate of 5% per annum starting from the connection date.

q. Issuance Costs of Bonds

Issuance costs of bonds are deducted directly from the related proceeds of the bonds to determine the net proceeds. The difference between the net proceeds and the nominal value is amortized using the straight-line method over the term of the bonds.

r. Revenue and Expense Recognition

Revenue from sale of electricity is recognized based on electricity usage (kWh). Expenses are recognized when incurred (accrual basis).

s. Government Subsidy

Government subsidy of electricity which has been intended to subsidize the Company’s customers with certain tariff, is recognized as revenue on accrual basis which is computed in accordance with the provisions stipulated in the Rule of Ministry of Finance of the Republic of Indonesia. The difference between the amount of electricity subsidy that had been recognized as revenue and the final result of electricity subsidy computation is recorded when the final result of electricity subsidy computation is obtained.

t. Troubled Debt Restructuring The effect of debt restructuring involving modification of terms without transfer of assets or equity is accounted prospectively from the date of restructuring. No gain on restructuring is recognized unless the carrying amount of the payable (including interest and penalty) exceeds the total future cash payments of principal and interest agreed in the new terms, without considering their present values.

Gain on debt restructuring net of the related restructuring expenses and income tax, is recognized in the year the restructuring is completed and is presented as an extraordinary item.

u. Employee Benefits

Post-employment benefits

Post-employment benefits are determined using the Projected Unit Credit Method. The accumulated unrecognized actuarial gains and losses that exceed 10% of the greater of the present value of the defined benefit obligations and the fair value of plan assets, is recognized on straight-line basis over the expected average remaining service years of the participating employees. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested.

The employee benefits obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost, and reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to unrecognized actuarial losses and past service cost, plus the present value of available refunds and reductions in future contributions to the plan.


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Other long-term benefits Other long-term benefits are determined using the Projected Unit Credit Method. Past service cost and actuarial gains (losses) are recognized immediately to the current operations.

The other long-term employee benefit obligation recognized in the consolidated balance sheets represents the present value of the defined benefit obligation.

v. Provisions

Provisions are recognized when the Company and its subsidiaries have a present obligation (legal or constructive) as a result of a past event, it is probable that the Company and its subsidiaries will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

w. Income Tax Current tax expense is determined based on the taxable income for the year computed using the prevailing tax rates.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for deductible temporary differences and tax loss carryforward to the extent that it is probable that taxable income will be available in future periods against which the deductible temporary differences and tax loss carryforward can be utilized. Deferred tax is calculated at the tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the consolidated statement of income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset in the consolidated balance sheet, except if these are for different legal entities, in the same manner the current tax assets and liabilities are presented.

x. Earnings (Loss) per Share Basic earnings (loss) per share is computed by dividing earnings (loss) by the weighted average number of shares outstanding during the period.

Diluted earnings (loss) per share is computed by dividing earnings (loss) by the weighted average number of shares outstanding as adjusted for the effects of all dilutive potential ordinary shares.


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y. Segment Information Segment information is prepared using the accounting policies adopted for preparing and presenting the consolidated financial statements. The Company and its subsidiaries’ primary reporting segment information is based on geographical segment, while their secondary reporting segment information is based on business segment.

A geographical segment is a distinguishable component of an enterprise that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.

A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other segments.

3. SUBSIDIARIES

The Company has ownership interests, directly or indirectly, in the following subsidiaries:

Nature of Commercial

Subsidiaries Domicile Business 2007 2006 Operations 2007 2006

PT Indonesia Power (IP) and Jakarta Power generation 100.0 100.0 1995 59,186 61,792

and its subsidiaries

PT Cogindo Dayabersama Jakarta Cogeneration, 99.9 99.9 1999 64 73

(CDB) *) energy distribution,

energy service and

management

PT Artha Daya Coalindo Jakarta Coal trading 60.0 60.0 1999 47 39

(ADC) *)

PT Indo Pusaka Berau Berau Power generation 50.0 50.0 2005 148 139

(IPB) ***)

PT Pembangkitan Jawa Bali Surabaya Power generation 100.0 100.0 1995 41,678 41,400

(PJB) and its subsidiary

PT PJB Service (PJBS) *) Surabaya Service 95.0 95.0 2001 19 18

PT Pelayanan Listrik Nasional Batam Electricity supplier 100.0 100.0 2000 1,572 1,399

Batam (PLN Batam)

PT Indonesia Comnets Plus Jakarta Communications provider 100.0 100.0 2000 415 242

(ICON)

PT Prima Layanan Nasional Jakarta Engineering, procurement 99.3 99.3 2003 21 26

Enjiniring (PLNE) and construction

PT Pelayanan Listrik Nasional Tarakan Electricity supplier 100.0 100.0 2004 221 195

Tarakan (PLN Tarakan)

PT Rekadaya Elektrika (RDE) *) Jakarta Electricity and engineering 68.1 68.1 2004 38 29

Majapahit Holding B.V. (MH) Netherlands Finance 100.0 - 2006 9,340 -

and its subsidiary

Majapahit Finance B.V. (MF) *) Netherlands Finance 100.0 - 2006 9,162 -

*) Indirect ownership

**) Stated in billions of Rupiah

***) IP has a power to govern the financial and operating policies of IPB, hence the financial statements of IPB was consolidated.

elimination **)

Percentage of

Ownership

Total assets before


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4. PROPERTY, PLANT AND EQUIPMENT

January 1, March 31,

2007 Additions Deductions 2007

Cost or revalued amount Direct acquisitionsLand 7,571,799 1,265 2,242 7,570,822Buildings, reservoir and infrastructure 27,594,012 29,733 2,134 27,621,611Installations and power plant 91,490,256 155,657 9,390 91,636,523Transmission equipment 48,855,340 420,271 14,637 49,260,974Distribution equipment 60,190,299 361,004 11,329 60,539,974General equipment 2,970,285 35,073 972 3,004,386Motor vehicles 521,041 1,204 15,768 506,477Spare parts 422,316 8,832 10,667 420,481Telecommunication and data processing

equipment 2,254,694 39,717 2,727 2,291,684

Subtotal 241,870,042 1,052,756 69,866 242,852,932Leased assetsLand 58,591 - - 58,591Installations and power plant 15,767,182 - - 15,767,182

Subtotal 15,825,773 - - 15,825,773

Total 257,695,815 1,052,756 69,866 258,678,705

Accumulated depreciation Direct acquisitionsBuildings, reservoir and infrastructure 4,760,808 220,853 1,055 4,980,606Installations and power plant 25,132,752 1,228,013 7,710 26,353,055Transmission equipment 7,718,217 433,409 3,483 8,148,143Distribution equipment 15,991,070 587,178 10,062 16,568,186General equipment 1,886,955 83,486 854 1,969,587Motor vehicles 383,448 17,757 15,864 385,341Spare parts 137,694 5,724 2,821 140,597Telecommunication and data processing

equipment 1,179,874 45,352 2,034 1,223,192

Subtotal 57,190,818 2,621,772 43,883 59,768,707Leased assetsInstallations and power plant 121,741 145,992 - 267,733

Subtotal 121,741 145,992 - 267,733

Total 57,312,559 2,767,764 43,883 60,036,440

Net Book Value 200,383,256 198,642,265


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January 1, March 31,

2006 Additions Deductions 2006

Cost or revalued amount Direct acquisitions Land 7,364,101 14,706 3,142 7,375,665Buildings, reservoir and infrastructure 24,025,871 29,584 1,533 24,053,922Installations and power plant 87,178,629 152,054 1,522 87,329,161Transmission equipment 43,623,767 179,831 9,570 43,794,028Distribution equipment 57,707,691 463,824 31,495 58,140,020General equipment 2,496,087 44,351 1,575 2,538,863Motor vehicles 514,116 6,309 2,308 518,117Spare parts 411,497 3,270 5,453 409,314Telecommunication and data processing

equipment 1,358,685 32,641 1,168 1,390,158

Total 224,680,444 926,570 57,766 225,549,248

Accumulated depreciation Direct acquisitions Buildings, reservoir and infrastructure 3,880,372 193,528 637 4,073,263Installations and power plant 20,559,691 1,236,761 1,043 21,795,409Transmission equipment 6,364,295 406,809 50 6,771,054Distribution equipment 13,728,639 565,696 14,368 14,279,967General equipment 1,576,904 72,173 4,024 1,645,053Motor vehicles 349,789 13,781 919 362,651Spare parts 125,259 4,893 1,042 129,110Telecommunication and data processing

equipment 704,144 24,998 610 728,532

Total 47,289,093 2,518,639 22,693 49,785,039

Net Book Value 177,391,351 175,764,209

Depreciation expense was allocated to the following :

2007 2006

Operating expenses 2,656,369 2,504,655Construction in progress 2,666 2,742Total 2,659,035 2,507,397

Additions to property, plant and equipment - direct acquisitions include the transfer from construction in progress, which has been completed and ready for operations amounting to Rp 792,876 million in 2007 and Rp 735,031 million in 2006, and assets not used in operations which were used in services again amounting to Rp 21,310 million in 2007 and Rp 49,006 million in 2006.

Property, plant and equipment – direct acquisitions deductions include transfers to assets not used in operations amounting to Rp 19,030 million in 2007 and Rp 7,264 million in 2006.

The Company and its subsidiaries own several pieces of land with Rights to Use (Hak Pakai), Building Use Rights (Hak Guna Bangunan). Rights to Use have no expiration date while Building Use Rights will expire between 20 to 30 years until 2016 to 2034. The Company and its subsidiaries also have several pieces of land, which are still being processed for extension and transfer of the certificate in the name of the Company and its subsidiaries.


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The Company and its subsidiaries revalued certain property, plant and equipment as of January 1, 2002. The revaluation was made in accordance with Decision Letter of the Minister of Finance of the Republic of Indonesia No. 486/KMK.03/2002 dated November 28, 2002 and Decision Letter of the Directorate General of Taxes No. KEP-519/PJ/2002 dated December 2, 2002. In 2002, the Company and its subsidiaries obtained approval on the revaluation and received decision letters concerning the final income tax on the revaluation increment of such assets from the Directorate General of Taxes. In 2003, the Company and its subsidiaries requested for a reduction in final income tax on the revaluation increment and the Directorate General of Taxes has approved such tax reduction in its decision letters.

The revaluation of the Company and its subsidiaries’ property, plant and equipment was conducted by PT Sucofindo Appraisal Utama, an independent appraiser, in its report No. 124-REV/SAU-APP/PST/XII/02 dated February 28, 2003. The revaluation was determined using the cost and market approach method.

When the revaluation was recorded in the beginning year of 2002, the accumulated depreciation of property, plant and equipment was eliminated against the cost of property, plant and equipment and the net book value was adjusted to the revalued amount of the related property, plant and equipment.

The details of property, plant and equipment which were appraised are as follows :

Total carrying Total carryingamount before Revaluation amount after

revaluation increment revaluation

Cost or revalued amount Land 654,139 2,161,512 2,815,651Building, reservoir and infrastructure 5,524,597 1,609,018 7,133,615Installations and power plant 9,593,766 5,811,685 15,405,451Transmission equipment 12,704,598 21,391,505 34,096,103Distribution equipment 15,263,873 34,812,000 50,075,873General equipment 1,290,599 (373,301) 917,298Motor vehicles 177,651 156,975 334,626Spare parts 187,461 23,735 211,196Telecommunication and data processing

equipment 766,311 (77,068) 689,243Total 46,162,995 65,516,061 111,679,056

Accumulated depreciation Building, reservoir and infrastructure 1,018,065 (1,018,065) -Installations and power plant 2,698,075 (2,698,075) -Transmission equipment 2,593,448 (2,593,448) -Distribution equipment 4,525,564 (4,525,564) -General equipment 1,056,149 (1,056,149) -Motor vehicles 125,347 (125,347) -Spare parts 40,372 (40,372) -Telecommunication and data processing

equipment 384,645 (384,645) -Total 12,441,665 (12,441,665) -

Net Book Value 33,721,330 77,957,726 111,679,056

The Company


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Total carrying Total carryingamount before Revaluation amount after

revaluation increment revaluation

Cost or revalued amount Land 323,455 3,800,671 4,124,126Building, reservoir and infrastructure 4,444,493 10,711,679 15,156,172Installations and power plant 19,134,034 45,545,083 64,679,117Transmission equipment 162,109 17,364 179,473Distribution equipment 294,875 278,295 573,170General equipment 580,938 (126,243) 454,695Motor vehicles 53,483 11,846 65,329Spare parts 4,665 2,658 7,323Telecommunication and data processing

equipment 38,053 (3,822) 34,231Total 25,036,105 60,237,531 85,273,636

Accumulated depreciation Building, reservoir and infrastructure 1,011,517 (1,011,517) -Installations and power plant 4,140,059 (4,140,059) -Transmission equipment 9,831 (9,831) -Distribution equipment 14,693 (14,693) -General equipment 473,679 (473,679) -Motor vehicles 48,956 (48,956) -Spare parts 530 (530) -Telecommunication and data processing

equipment 9,838 (9,838) -Total 5,709,103 (5,709,103) -

Net Book Value 19,327,002 65,946,634 85,273,636

Total 53,048,331 143,904,360 196,952,691

Its subsidiaries

The revaluation increment on the Company’s property, plant and equipment was presented as “Revaluation increment on property, plant and equipment” account as part of equity. The revaluation increment of the subsidiaries’ property, plant and equipment was recognized by the Company based on percentage of the Company’s ownership in the subsidiaries and presented as ”Difference due to changes in equity of subsidiaries” account as part of equity (Notes 21 and 22).

As of March 31, 2007, installations and power plant and transmission equipment were insured to several insurance companies in which PT Asuransi Tugu Kresna Pratama acted as lead underwriter against fire and other possible risks with insurance coverage of US$ 11,669 million and Rp 513,064 million, and leased assets were insured to PT Asuransi Mitsui Sumitomo Indonesia against fire and other possible risks with insurance coverage of US$ 1,400 million. Management believes that the insurance coverage is adequate to cover possible losses on the assets insured. The Company and its subsidiaries do not cover insurance protection for assets other than installations, power plant and transmission equipment.

Certain distribution equipment are used as collateral for bank loans (Note 28).

Leased assets represent the PLTU Tanjung Jati B 2 x 660 MW power plant. The acquisition cost of leased assets includes value added tax amounting to Rp 1,402,704 million. Leased assets were used as collateral of lease liability (Notes 10 and 27).

Management believes that there are no events or changes in circumstances which may indicate an impairment in value of property, plant and equipment as of the balance sheet date.


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5. CONSTRUCTION IN PROGRESS This account represents costs incurred in relation to the construction and renovation/betterment of power supply facilities, as follows :

2007 2006

Power plants 5,190,579 10,059,847Transmission 4,956,222 8,530,799Distribution 1,116,540 1,148,582Equipment 19,350 53,539Total 11,282,691 19,792,767

Power plants under construction consist mainly of PLTU Tarahan 2 x 100 MW (Unit 3 and 4), PLTU Labuhan Angin 2 x 115 MW, PLTP Sarulla 300 MW, PLTP Lahendong 3 x 20 MW and PLTA Ampel Gading 2 x 7.5 MW. PLTP Sarulla is a geothermal power plant which was taken over on January 23, 2004 from Unocal North Sumatera Geothermal Ltd. for US$ 60 million. Transmission under construction consists mainly of transmission network in Java and Bali. Constructions in progress as of March 31, 2007, are expected to be completed between 2007 and 2010. Borrowing costs, including interest expense and foreign exchange differences, which were capitalized to construction in progress amounted to Rp 30,023 million in 2007 and Rp 49,933 million in 2006. Management believes that there are no events or changes in circumstances which may indicate an impairment in value of construction in progress as of the balance sheet date.

6. LONG-TERM INVESTMENTS

Long-term investments consist of investments in shares of stock and consortiums, as follows:

Commercial

Domicile Nature of business operations 2007 2006

Direct ownership

PT Geo Dipa Energi Bandung Electricity supplier 2002 33.00 33.00

PT Unelec Indonesia Jakarta Electrical supports 1988 32.35 32.35

Indirect ownership

PT Daya Citra Mulia Banjarmasin Coal mining and trading 2002 25.00 25.00

PT Mitra Energy Batam Batam Electricity supplier 2004 30.00 30.00

PT Sumber Segara Primadaya Cilacap Electricity supplier 2006 49.00 49.00

PT Dalle Energy Batam Batam Electricity supplier 2006 20.00 -

PT Bajradaya Sentranusa Asahan Electricity supplier *) 26.02 26.02

PT Indo Muba Power Jakarta Electricity supplier *) 35.00 35.00

PT Metaepsi Pejebe Power Jakarta Electricity supplier 2007 19.00 19.00

Generation

PT Bukit Pembangkit Inovatif Palembang Electricity supplier *) 20.00 -

PT Pura Daya Prima Palembang Electricity supplier 2007 15.00 15.00

PT Elnusa Prima Elektrika Palembang Electricity supplier 2007 7.50 7.50

PT Multidaya Prima Elektrindo South Sumatera Electricity supplier *) 15.00 -

PT Permata Prima Elektrindo South Sumatera Electricity supplier *) 15.00 -

PT Tenaga Listrik Jayapura Jayapura Electricity supplier *) 20.00 -

PT Tenaga Listrik Bintan Pulau Bintan Electricity supplier *) 10.00 -

PT TJK Power Batam Electricity supplier *) 10.00 10.00

Consortiums

CBE consortium Batam Electricity supplier *) 55.00 55.00

KSPM consortium Saguling Ramie plantation **) 49.00 49.00

IP-NTP consortium Bandung Electricity supplier *) 80.00 80.00

Indo Kupang Elektrindo Power Kupang Electricity supplier *) 51.00 51.00

consortium

*) Development stage

**) Under liquidation

Percentage of ownership


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Changes in long-term investments are as follows :

Equity in net

Carrying income (loss) Carrying

amount of associates amount

January 1, Additions for the current March 31,

2007 (deductions) year 2007

PT Geo Dipa Energi 68,532 - (3,196) 65,336

PT Unelec Indonesia 19,494 - 2,666 22,160

PT Daya Citra Mulia 2,752 - 189 2,941

PT Mitra Energy Batam 33,708 - 1,093 34,801

PT Sumber Segara Primadaya 239,242 - 5,777 245,019

PT Dalle Energy Batam 18,600 - (539) 18,061

PT Bajradaya Sentranusa 176,575 - (216) 176,359

PT Indo Muba Power 1,886 - - 1,886

PT Metaepsi Pejebe Power

Generation 17,670 - - 17,670

PT Multidaya Prima Elektrindo 1,500 - - 1,500

PT Tenaga Listrik Jayapura 2,000 - - 2,000

PT Tenaga Listrik Bintan 1,000 - - 1,000

PT TJK Power 1,100 - - 1,100

PT Bukit Pembangkit Inovatif 502 3,750 - 4,252

Other companies 368 - - 368

Consortiums

CBE consortium 5,375 (1,892) - 3,483

Other consortium 1,153 - - 1,153

Total 591,457 1,858 5,774 599,089

2007

Equity in net

Carrying income (loss) Carrying

amount of associates amount

January 1, Additions for the current March 31,

2006 (deductions) year 2006

PT Geo Dipa Energi 103,745 - (8,803) 94,942

PT Unelec Indonesia 13,902 - 2,228 16,130

PT Daya Citra Mulia 2,470 - 189 2,659

PT Mitra Energy Batam 29,338 - 1,093 30,431

PT Sumber Segara Primadaya 183,713 27,261 - 210,974

PT Bajradaya Sentranusa 17,437 - (216) 17,221

PT Indo Muba Power 1,886 - - 1,886

PT Metaepsi Pejebe Power

Generation 190 17,480 - 17,670

PT TJK Power - 1,000 - 1,000

Other companies 323 - - 323

Consortiums

CBE consortium 8,055 - - 8,055

Other consortiums 1,153 - - 1,153

Total 362,212 45,741 (5,509) 402,444

2006


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Investment in shares of stock PT Geo Dipa Energi is a joint venture between the Company and Pertamina. It was established to continue the development of Dieng and Patuha power plant projects previously owned by Himpurna California Energy Limited and Patuha Power Limited.

The acquisition cost of investment in shares of stock of PT Unelec Indonesia amounting to Rp 15,073 million was based on the Government Regulation No. 2/1998 dated January 7, 1998.

PLN Batam acquired 30% of PT Mitra Energy Batam from Yayasan Pendidikan dan Kesejahteraan - PLN. Liabilities arising from such acquisition as of March 31, 2006 amounting to Rp 11,500 million were fully paid in 2006 (Note 31).

PJB acquired 49% of PT Sumber Segara Primadaya (SSP). In 2006, PJB increased its investment by Rp 27,261 million, without a corresponding change in its percentage share of ownership.

In 2006, PLN Batam acquired 20% of PT Dalle Energy Batam from PT Medco Power Indonesia. This acquisition was approved during PLN Batam’s Extraordinary Stockholders General Meeting dated June 29, 2006. Liability arising from such acquisition amounting to Rp 18,600 million was recorded as other payables.

PJB acquired 26.02% of PT Bajradaya Sentranusa (BDSN), under a development stage on the company engaged in electricity water power plant (PLTA Asahan). Based on President Decree year 2000, this project was postponed, and subsequently was continued in year 2002. In 2006, PJB obtained an investment in Mandatory Convertible Bond (MCB) with par value of Rp 243,707 million and an acquisition cost of Rp 160,000 million. MCB should be converted into 243,707 BDSN’s shares with par value of Rp 1 million per share (Note 8). PJB has converted the MCB to BDSN, without a corresponding change in its percentage share of ownership. Investment in share of PJB in BDSN consisting of 262,707 shares were pledged as security for the loan of BDSN from China Huadian Hongkong Company Limited.

PJB acquired 19% of PT Metaepsi Pejebe Power Generation. On February 16, 2006, PJB increased its investment by Rp 17,480 million without a corresponding change in its percentage share of ownership.

PT Tenaga Listrik Jayapura (TLJ) and PT Tenaga Listrik Bintan (TLB) were established in accordance with Joint Venture Agreements dated October 4, 2006 between PLN Tarakan and other parties. PLN Tarakan acquired 20% of TLJ and 10% of TLB. The scope of activities of TLJ and TLB is to build, operate and maintain a PLTU 2x10 MW project, including sale of electricity to the Company. Based on the agreement, PLN Tarakan has an obligation to participate in financing both projects amounting to US$ 9.6 million. This financing will be recovered upon commercial operations of the projects. In 2006, PLN Tarakan has paid US$ 1,380,000 each to TLJ and TLB, which were recorded as receivables from related parties. As of December 31, 2006, PLN Tarakan also had liabilities arising from acquisitions of TLJ and TLB amounting to Rp 2,000 million and Rp 1,000 million, respectively. In 2007, such liabilities have been offset against receivables based on mutual agreements. In 2006, PLN Batam established PT TJK Power (TJK). PLN Batam owns 100% of TJK. On October 2, 2006, PLN Batam sold 90% of its shares in TJK. Furthermore, PLN Batam increased its investment by Rp 900 million without a corresponding change in its percentage share of ownership. In 2006, PJB acquired 20% of PT Bukit Pembangkit Inovatif. PJB has an obligation to operate and maintain such power plant and also to contribute its investment in shares totaling to US$ 14.5 million which have to be fully paid until 2009. In 2007, PJB increased its investment by Rp 3,750 million without a corresponding change in its percentage share of ownership.


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Consortium IP and CDB entered into several consortium agreements with other parties for the development of certain projects. IP and CDB account for the investment in these consortium agreements at cost based on their funding of such projects, less any impairment. These consortium agreements will be changed into limited joint venture companies when the development of the projects is completed or when the joint venture companies are established. Management believes that there are no events or changes in circumstances which may indicate an impairment in value of long-term investments as of balance sheet date.

7. ASSETS NOT USED IN OPERATIONS

2007 2006

Assets for relocation, disposal and repairsAt cost

Property, plant and equipment to be relocated 652,182 681,566Property, plant and equipment to be disposed of 1,625,788 1,395,164Property, plant and equipment to be repaired 282,452 241,557Spare parts to be disposed of 175,937 162,089Construction in progress to be disposed of 16,831 15,652Total 2,753,190 2,496,028

Accumulated depreciation or decline in value Property, plant and equipment to be relocated 248,015 106,795Property, plant and equipment to be disposed of 1,625,788 1,395,164Property, plant and equipment to be repaired 102,117 103,071Spare parts to be disposed of 175,937 162,089Construction in progress to be disposed of 16,830 15,652Total 2,168,687 1,782,771

Carrying amount 584,503 713,257Assets not yet used in operations 390,045 1,474,374

Total 974,548 2,187,631

Loss on impairment of property, plant and equipment amounted to Rp 119,286 million in 2007 and Rp 102,366 million in 2006.

Certain assets not used in operations amounting to Rp 760 million in 2007 and Rp 695 million in 2006 were sold. The book value of such property, plant and equipment were nil, hence proceeds from the sale represented gain on sale of property, plant and equipment (Note 46).

Property, plant and equipment to be relocated consist mainly of PLTG unit 2 Talang Duku, transmission and distribution equipment.

Property, plant and equipment to be disposed of represent PLTD Apung in Nanggroe Aceh Darussalam, pipe gas installations, machinery, building and infrastructure of PLTG Priok, housing and distribution equipment. Management believes that impairment for assets not yet used in operations is adequate to cover possible loss on impairment on value of such assets.


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8. RECEIVABLES FROM RELATED PARTIES

2007 2006

PT Sumber Segara Primadaya (US$ 57,307,898 in 2007 and US$ 53,359,875 in 2006) 522,533 484,241

PT TJK Power 18,614 -PT Tenaga Listrik Jayapura (US$ 1,158,271) 10,561 -PT Tenaga Listrik Bintan (US$ 1,269,135) 11,571 -PT Dalle Energy Batam 14,870 -PT Bajradaya Sentranusa 5,035 5,035PT Mitra Energy Batam 2,857 -Officers 644,362 561,271Total 1,230,403 1,050,547

On January 28, 2004, PJB granted a long-term loan of US$ 52 million to PT Sumber Segara Primadaya (SSP) for financing of PLTU Cilacap project. This loan will mature in nine years, including two years grace period, due on January 28, 2013 and bears interest at 12.907% per annum. The interest will be received in 15 semi-annual installments starting January 28, 2006 until January 28, 2013. The principal will be collected in 4 installments starting from July 28, 2011 to January 28, 2013. The loan was approved during the Extraordinary General Meeting of the Stockholders dated January 14, 2004. The receivable is secured by PT Sumber Energi Sakti Prima (SES), a shareholder of SSP, when SSP fails to pay interest and/or principal amount to PJB 30 days after the due date. When SES fails to secure such payment, the shares ownership of SES in SSP will be transferred to PJB, with the condition that SES will have an option to repurchase such shares.

As of March 31, 2007 and 2006, interest on receivable from SSP amounting to Rp 48,397million and Rp 12,341 million, respectively, were included in the principal amounts.

PJB also provided loan to PT Bajradaya Sentranusa (BDSN), due on May 7, 2005. This loan is used by BDSN to restructure its bank loans. PJB charged interest to BDSN at the prevailing rate of Bank DBS Indonesia since the funding of the loan was obtained from the same bank. Based on the Sale and Purchase of Receivable Agreement dated February 9, 2006, PJB obtained from Jing Dian Power Co., Ltd. (JDP), Hong Kong, the investment in mandatory convertible bond of BDSN amounting to Rp 243,707 million, due on September 30, 2006, and with zero interest rate in exchange of PJB’s receivable from BDSN amounting to Rp 160,000 million. The bond is convertible into 243,707 shares with a nominal value of Rp 1 million each (Note 6).

As of March 31, 2007 and 2006, interest on receivable from BDSN amounting to Rp 5,035 million and Rp 1,741 million, respectively, were included in the principal amounts. Accounts receivable from PT TJK Power (TJK) represent advance payment made by PLN Batam for development cost of PLTU Tanjung Kasam owned by TJK. Accounts receivable from PT Dalle Energy Batam and PT Mitra Energy Batam represent power purchase contract penalty receivable. Accounts receivable from officers represent mainly non-interest bearing housing loans, which are paid monthly through salary deduction.

No allowance for doubtful accounts was provided for receivables from related parties, as management believes that all of these receivables are collectible.


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9. RESTRICTED CASH IN BANKS AND TIME DEPOSITS

2007 2006

Restricted cash in banksSumitomo Mitsui Banking Corporation, Singapore -

(US$ 37,416,321 and JPY 42,324,888,953 in 2007 and US$ 35,000,000 and JPY 4,665,362,878 in 2006) 3,624,727 676,765

Restricted time deposits

Bank Negara Indonesia - (US$ 100,000,000) 911,800 907,500Others 7,966 1,500Total 4,544,493 1,585,765

Restricted cash in bank in Sumitomo Mitsui Banking Corporation, Singapore represents reserve accounts for lease installment and for guarantee of operation, maintenance and fuel procurement of PLTU Tanjung Jati B, Unit A and B (Note 27).

Time deposits owned by PJB in Bank Negara Indonesia were pledged as collateral for PT Sumber Segara Primadaya’s (SSP) Letter of Credit facilities in relation to PLTU Cilacap Project. The full payment of the used facilities is to be made by SSP in 2008, hence, such time deposits were restricted for use until 2008.

10. OTHER NONCURRENT ASSETS

2007 2006

Deferred charges - net Landrights 30,485 33,222Software 577,058 467,980Total 607,543 501,202

Prepaid expenses Pension (Note 49) 8,545 12,066Building and land rental 10,132 12,192Others 106,095 107,825Total 124,772 132,083

Advances PT Central Java Power 80 797,518Projects 598,605 786,867Total 598,685 1,584,385

Total 1,331,000 2,217,670

Advances to PT Central Java Power represent mainly disbursement funds for import value added tax (VAT) in relation to procurement of machinery power plant of PLTU Janjung Jati B. In 2006, such VAT has already offset with the Company’s VAT tax payable in accordance with handover of leased assets.


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11. CASH AND CASH EQUIVALENTS

2007 2006

Cash on hand 45,097 54,016Cash in banks

Bank Mandiri Rupiah 923,080 1,355,885US$ 994,053 414,260EUR 543 -JPY 456 9,406

Bank Negara Indonesia Rupiah 1,526,994 2,717,455US$ 615,728 401,936EUR 257 5,483CHF 3,583 3,241

Bank Rakyat IndonesiaRupiah 2,091,668 1,034,138US$ 1,395,373 124,789JPY 1,847 24,876EUR 23,759 21,976

Bank Bukopin Rupiah 1,571,111 1,387,409US$ 952,370 -

Others (each below 5% of total)Rupiah 720,159 706,389US$ 55,006 142,688JPY 1,299 -EUR 180 121SGD 3 -

Total cash on hand and in banks 10,922,566 8,404,068

Cash equivalents - time depositsBank Negara Indonesia

Rupiah 521,598 22,193US$ 2,735,400 -

Bank Bukopin Rupiah 233,500 6,000US$ 911,800 -

Bank Rakyat IndonesiaRupiah 20,000 28,240US$ 911,800 -

Bank MandiriRupiah 176,661 31,601US$ 227,950 -

Bank Century (CIC) - US$ 227,950 -Others (each below 5% of total) 36,719 35,000Total time deposits 6,003,378 123,034

Total Cash and Cash Equivalents 16,925,944 8,527,102

Interest rate per annum on time depositsRupiah 6% - 14% 5% - 13.6%US$ 3.75% - 4.84% 3.75% - 4.25%


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Details of cash and cash equivalents in foreign currencies are as follows :

Original Rp Original Rp currency *) equivalent currency *) equivalent

US$ 990,066,969 9,027,430 119,413,094 1,083,673JPY 46,430,048 3,602 445,341,761 34,282EUR 2,035,371 24,739 2,531,997 27,580Others **) 393,216 3,586 357,149 3,241Total 9,059,357 1,148,776

2007 2006

*) In full amount

**) Cash and cash equivalents denominated in other foreign currencies are presented as US$ equivalents using the exchange rates prevailing at balance sheet date

12. SHORT-TERM INVESTMENTS

2007 2006

Time deposits Bank Negara Indonesia

Rupiah 225,000 324,010US$ 45,590 18,150

Bank Mandiri Rupiah 117,147 216,524US$ - 8,168

Bank Rakyat Indonesia 324,000 144,760Bank Bukopin 305,000 155,000Others (each below 5% of total)

Rupiah 41,500 32,150US$ 1,824 1,815

Total 1,060,061 900,577

Other investments 1,919 1,175Total short-term investments 1,061,980 901,752

Interest rate per annum on time deposits Rupiah 7.75% - 11.59% 5.75% - 8.15%US$ 3.70% - 4.75% 0.65% - 2.5%


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As of March 31, 2007, time deposits, which were used as collateral, are as follows :

Placement Total Used as collateral for :

Bank Negara Indonesia 80,000 Opening of letter of credit to purchase maintenance material by PJB Bank Mandiri 60 Bank guarantee facility, PLTU Project LabuanBank Rakyat Indonesia 10,000 Working capital loan of ADC

4,000 Bank guarantee facility, and PLTU Jayapura - Lot II-1Bank Bukopin 5,000 Working capital loan of ADC Total 99,060

13. TRADE ACCOUNTS RECEIVABLE

2007 2006

a. By Debtor

Public 2,106,978 1,657,451Government 307,740 289,900State-owned companies 37,250 34,974Indonesian Armed Forces 464,527 409,123Total 2,916,495 2,391,448Allowance for doubtful accounts (321,567) (348,034)

Net 2,594,928 2,043,414

b. By Age Category

1 to 90 days 1,477,731 1,044,74991 to 360 days 966,435 914,614More than 360 days 472,329 432,085Total 2,916,495 2,391,448Allowance for doubtful accounts (321,567) (348,034)

Net 2,594,928 2,043,414

Changes in the allowance for doubtful accountsBeginning balance (314,973) (341,031)Additions (6,959) (32,550)Write-off 365 25,547Ending balance (321,567) (348,034)


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Management believes that the allowance for doubtful accounts is adequate to cover possible losses on uncollectible accounts. Management also believes that there are no significant concentration of credit risk in receivables.

Trade accounts receivable are used as collateral for bank loans and PLN Bonds VI Year 1997 (Notes 28 and 29).

14. RECEIVABLES ON ELECTRICITY SUBSIDY

2007 2006

Budget years (Note 38)2005 - 3,660,3142006 852,697 5,146,212

2007 10,309,601 -Total 11,162,298 8,806,526

As of March 31, 2006, the Company had the receivable on electricity subsidy for budget year 2005 amounting to Rp 3,660,314 million which is referred to the 2005 Company’s computation of the electricity subsidy of Rp 12,510,960 million based on the formula as stipulated in Rule of Minister of Finance of the Republic of Indonesia No. 117/PMK.02/2005 dated November 29, 2005. On December 27, 2006, the Company obtained the final result of the 2005 electricity subsidy computation amounting to Rp 10,639,968 million. The difference between the Company’s computation and the final result of the 2005 electricity subsidy computation amounted to Rp 1,870,992 million, which was mainly due to the transmission and distribution losses used by the Company were higher than the transmission and distribution losses determined by the Directorate of General of Electricity and Energy Consumption. Such difference was recorded as a deduction to the receivable on electricity subsidy for budget year 2005. In February 2007, the Company has received the electricity subsidy receivables for budget year 2006 amounting to Rp 2,874,372 million. In April 2007, the receivables on electricity subsidy for budget year 2007 amounting to Rp 5,248,102 million has realized by offseting against accounts payable to Pertamina.

15. OTHER RECEIVABLES

2007 2006

Contractors 54,195 123,966Interest from accounts receivable 50,715 10,951Others 103,437 56,377Total 208,347 191,294

No allowance for doubtful accounts was provided for other receivables, as management believes that all of these receivables are collectible.


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16. INVENTORIES

2007 2006

Fuel and lubricants 3,514,559 2,878,554Transformers 45,560 22,642Switchgear and networking 71,591 39,067Wire 26,872 21,754Meter recording device and control equipment 84,090 81,366General supplies 954,032 720,301Total 4,696,704 3,763,684Allowance for the decline in value (46,402) (36,265)

Net 4,650,302 3,727,419

Changes in allowance for the decline in value are as follows: Beginning balance (44,084) (30,017)Additions (2,318) (6,248)Ending balance (46,402) (36,265)

Management believes that the allowance is adequate to cover possible losses on decline in value of inventories.

The Company and its subsidiaries do not provide any insurance to cover the possible losses in inventories.

17. PREPAID TAXES

2007 2006

Overpayment of corporate income tax (Note 47) The Company

2007 377 -2006 1,812 1642005 1,751 2,5882004 - 823

Subsidiaries 2007 1,278 -2006 3,545 7,1752005 20,564 20,7102004 16,561 18,2772003 - 15,9482002 11,278 11,278

Income tax article 15 432 51Value added tax 8,143 3,366Payment for tax assessment letters for underpayment and

tax collection notice 127,594 285,508Total 193,335 365,888


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18. PREPAID EXPENSES AND ADVANCES

2007 2006

Prepaid expenses Salaries and allowances 232,305 204,312Pension (Note 49) 169,132 230,504Insurance 21,717 42,985Rent 16,391 19,780Others 37,035 53,260Total 476,580 550,841

Advances Purchase 198,074 124,851Others 28,013 24,688Total 226,087 149,539

Total 702,667 700,380

19. CAPITAL STOCK

The Company has authorized capital of Rp 63,000,000 million consisting of 63,000,000 shares, with par value of Rp 1 million per share.

Based on the extraordinary stockholder’s meeting dated July 18, 2001, as stated in deed No. 43 dated October 26, 2001 of Haryanto, SH, notary in Jakarta, the stockholders approved to:

• Convert the Company’s payable to Government of Rp 28,781,355 million, which arose from overdue interest and penalty on two-step loans, into Government Equity Participation (Note 26). The conversion was approved by the Minister of Finance of the Republic of Indonesia in its decision letter No. S-352/MK.06/2001 dated June 20, 2001.

• Increase the subscribed and paid-up capital by Rp 28,781,354 million, resulting to the Company’s total subscribed and paid-up capital of Rp 46,107,154 million consisting of 46,107,154 shares with par value of Rp 1 million per share.

On August 1, 2001, the Government issued Government Regulation No. 61 year 2001 in relation to the increase in Government Equity Participation in the Company.

The Company’s shares of stock are wholly owned by the Government of the Republic of Indonesia.


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20. ADDITIONAL PAID-IN CAPITAL

Additional paid-in capital represents Government Equity Participation received by the Company since its establishment, the status of which has not yet been determined as follows:

2007 2006

Project aid 16,466,601 15,623,695DIP (Daftar Isian Proyek - List of Project Fund) 9,261,902 8,240,300Regional Government participation and others 290,029 200,402Excess amount of the overdue interest and

penalty over the two-step loans converted into Government Equity Participation (Note 26) 1 1

Total 26,018,533 24,064,398

Project aid represents electricity project by the Government of the Republic of Indonesia transferred to the Company.

DIP represents fund received from the Government of the Republic of Indonesia for electricity development through the Department of Mining and Energy.

Regional Government participation represents land and electricity equipment donated by the Regional Government to the Company.

21. REVALUATION INCREMENT ON PROPERTY, PLANT AND EQUIPMENT

The Company revalued its fixed assets as of January 1, 2002. The details of revaluation increment on property, plant and equipment are as follows :

2007and 2006

Difference between the carrying amount and revalued amount of property, plant and equipment (Note 4) 77,957,726

Final income tax on revaluation increment on property, plant and equipment (3,678,787)Deferred tax effect 2,810,162Deferred gain on transfer of property, plant and equipment 551,457

Total 77,640,558

Deferred gain on transfer of property, plant and equipment resulted from the transfer of the Company’s property, plant and equipment to PLN Batam and ICON, subsidiaries, when they were established.


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22. DIFFERENCE DUE TO CHANGES IN EQUITY OF SUBSIDIARIES

This account represents the Company’s interest on the changes in equity of subsidiaries as a result of revaluation increment on property, plant and equipment of subsidiaries as follows:

2007and 2006

Difference between the carrying amount and the revalued amount of property, plant and equipment (Note 4) 65,946,634

Final income tax on revaluation increment on property, plant and equipment (7,124,851)Deferred tax effect 1,093,989Minority interest (77)

Total 59,915,695

The difference due to changes in equity of subsidiaries consists of the following:

2007and 2006

PT Indonesia Power 33,276,453PT Pembangkitan Jawa Bali 26,408,107PT Pelayanan Listrik Nasional Batam 208,463PT Indonesia Comnets Plus 22,556PT Artha Daya Coalindo 116Total 59,915,695

23. DEFERRED REVENUE

This account represents connection fees received from customers for electricity connection and upgrading of electricity power, with details as follows :

2007 2006

Beginning balance 6,252,377 5,858,062Additions 236,568 233,725Recognized as revenue during the period (131,119) (122,449)Ending balance 6,357,826 5,969,338

24. CUSTOMERS’ SECURITY DEPOSITS

This account represents security deposits from customers determined based on power supply and electricity tariff. Customer deposits will be refunded, net of unpaid electricity bills, when customers stop subscribing for electricity. The details are as follows:

2007 2006

Beginning balance 4,128,328 3,795,907Net additions 43,968 78,585Ending balance 4,172,296 3,874,492


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25. TWO-STEP LOANS

This account represents overseas, collateral-free loans of the Government of the Republic of Indonesia which are re-loaned to the Company to finance its projects. The details of two-step loans are as follows :

Foreign Current Long-term

currencies *) Total maturities portion Interest rate Period **)

% Years

International Bank for Reconstruction

and Development (IBRD)

Rupiah - 1,155,985 277,419 878,566 IBRD + (1.65% - 3.50%) 1987-2013

US$ 421,105,101 3,839,637 320,296 3,519,341 IBRD + 0.5% 1994-2023

Asian Development Bank (ADB)

Rupiah - 2,252,827 261,192 1,991,635 ADB + (1.75% - 3.75%) 1989-2016

US$ 183,236,704 1,670,752 209,859 1,460,893 ADB + 0.5% 1995-2027

Kreditanstalt Fur Wiederaufbau,

Jerman (KFW)

Rupiah - 362,068 75,720 286,348 7.6%-9% and SBI + 1% 1980-2014

EUR 52,431,791 637,272 117,660 519,612 KFW + 0.5% 1997-2020

US$ 22,858,001 208,419 19,832 188,587 4.75% + 0.35% 2004-2018

United Stated Agency for International

Development (USAID) - 2,578 834 1,744 2% 1979-2009

Export-Import Bank of The United States

Rupiah - 960 960 - 8% or SBI + 1% 1988-2008

US$ 6,321,607 57,640 31,773 25,867 7.04% - 7.1% 1996-2008

Japan Bank for International Cooperation

JPY 25,115,171,471 1,948,435 98,955 1,849,480 4.7% + 4.8% 1996-2045

US$ 75,331,408 686,872 - 686,872 Floating + 0.85% 2005-2011

Generale Bank S.A., Belgia dan Barclay

Bank PLC - EUR 316,615 3,848 2,565 1,283 7.1% 1996-2008

Midland Bank Public Limited Company - 220,161 23,776 196,385 SBI + 1% 1995-2020

Banque Paribas

Rupiah - 2,455 2,455 - SBI + 1% 1995-2007

GBP 16,111,743 288,308 18,019 270,289 3.84% 1998-2022

EUR 32,772,880 398,331 32,154 366,177 6.39% 1996-2018

Bank Austria Aktiengesellschaft

Rupiah - 3,510 3,510 - SBI + 1% 1995-2007

EUR 8,885,772 108,000 20,445 87,555 4% 1996-2012

Bank of China - 989 989 - 3.5% - SBI + 1% 1995-2007

China Exim Bank - US$ 4,078,474 37,188 - 37,188 3.5% + 0.5% 2004-2018

Mitsui Leasing - US$ 1,666,743 15,197 11,412 3,785 LIBOR + 1.2% 1997-2008

Islamic Development Bank - US$ 496,634 4,528 648 3,880 8% 1996-2012

Calyon and BNP Paribas - EUR 6,724,396 81,730 6,811 74,919 5.32% 2004-2019

Fortis Bank Belgia - EUR 2,012,023 24,455 1,223 23,232 4.82% 2005-2017

West Merchant Bank Limited - GBP 4,126,691 73,844 73,844 - 6.45% 1996-2007

ABN AMRO N.V. - EUR 21,315,296 259,072 198,973 60,099 7.10% 1995-2008

MKB Hungaria - US$ 1,146,416 10,453 909 9,544 4.81% + 0.5% 2004-2018

Efic Australia - AUD 21,523,273 158,491 15,879 142,612 4% 1998-2022

Kingdom of Belgium - EUR 1,616,310 19,645 - 19,645 4% 2005-2033

Total 14,533,650 1,828,112 12,705,538

*) In full amount

**) Include grace periods in terms of payments

2007


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Foreign Current Long-term

currencies *) Total maturities portion Interest rate Period **)

% Years

International Bank for Reconstruction

and Development (IBRD)

Rupiah - 1,312,900 291,998 1,020,902 IBRD + (1.65% - 3.50%) 1987-2013

US$ 420,361,283 3,814,779 245,508 3,569,271 IBRD + 0.5% 1994-2023

Asian Development Bank (ADB)

Rupiah - 2,391,508 250,665 2,140,843 ADB + (1.75% - 3.75%) 1989-2016

US$ 203,179,069 1,843,850 189,821 1,654,029 ADB + 0.5% 1995-2027

Kreditanstalt Fur Wiederaufbau,

Germany (KFW)

Rupiah - 505,103 145,863 359,240 7.6%-9% and SBI + 1% 1980-2014

EUR 41,473,014 451,755 49,959 401,796 KFW + 0.5% 1997-2020

US$ 3,164,173 28,715 13,632 15,083 4.75% + 0.35% 2004-2018

United Stated Agency for

International Development

(USAID) - 3,388 810 2,578 2% 1979-2009

Export-Import Bank of The

United States

Rupiah - 27,804 12,964 14,840 8% or SBI + 1% 1988-2008

US$ 12,065,833 109,498 31,879 77,619 7.04% - 7.1% 1996-2008

Japan Bank for International

Cooperation

Rupiah - 16,259 16,259 - SBI + 1% 1995-2006

JPY 26,478,731,635 2,038,332 273,214 1,765,118 4.7% - 4.8% 1996-2045

US$ 25,349,944 230,051 - 230,051 Floating + 0.85% 2005-2011

Meespierseon NV Belanda 2,338 2,338 - SBI + 1% 1995-2006

Generale Bank S.A., Belgium and Barclay

Bank PLC

Rupiah - 9,438 4,739 4,699 SBI + 1% 1995-2007

EUR 530,337 5,777 2,311 3,466 7.1% 1996-2008

Midland Bank Public Limited Company - 236,489 23,776 212,713 SBI + 1% 1995-2020

Swiss Bank - 110,322 55,161 55,161 SBI + 1% 1995-2007

Banque Paribas

Rupiah - 16,321 13,866 2,455 SBI + 1% 1995-2007

GBP 17,205,971 272,206 16,012 256,194 3.84% 1998-2022

EUR 35,045,224 381,739 14,468 367,271 6.39% 1996-2018

Ryoshin International (Hongkong)

Limited - 13,324 6,627 6,697 SBI + 1% 1995-2007

Bank Austria Aktiengesellschaft

Rupiah - 10,532 7,022 3,510 SBI + 1% 1995-2007

EUR 10,553,851 114,960 24,609 90,351 4% 1996-2012

Bank of China - 2,968 989 1,979 3.5% - SBI + 1% 1995-2007

Sumisho Leasing - US$ 1,273,683 11,559 11,559 - LIBOR + 1.2% 1995-2007

Nebula Leasing - US$ 11,426,542 103,696 51,848 51,848 LIBOR + 1.2% 1996-2007

Mitsui Leasing - US$ 2,515,633 22,829 3,805 19,024 LIBOR + 1.2% 1997-2008

Islamic Development Bank - US$ 1,425,893 12,940 12,940 - 8% 1996-2012

Calyon and BNP Paribas - EUR 5,888,163 64,138 - 64,138 5.32% 2004-2019

West Merchant Bank Limited - GBP 6,912,870 109,365 43,746 65,619 6.45% 1996-2007

ABN AMRO N.V. - EUR 37,874,399 412,556 179,213 233,343 7.10% 1995-2008

MKB Hungaria - US$ 354,340 3,216 - 3,216 4.81% + 0.5% 2004-2018

Efic Australia - AUD 22,080,732 147,197 13,800 133,397 4% 1998-2022

Total 14,837,852 2,011,401 12,826,451

*) In full amount

**) Include grace periods in terms of payments

2006


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Details of two-step loans in foreign currencies are as follows :


US$ 716,241,088 6,530,686 681,116,392 6,181,131JPY 25,115,171,471 1,948,435 26,478,731,635 2,038,333EUR 126,075,083 1,532,354 131,364,988 1,430,926Others **) 57,100,630 520,644 58,266,417 528,768Total 10,532,119 10,179,158

2007 2006

*) In full amount

**) Two-step loans denominated in other foreign currencies are presented as US$ equivalents using the exchange rates prevailing at balance sheet date

26. GOVERNMENT LOANS

2007 2006

Investment Fund Account No. RDI-393/DP3/2001 3,966,201 4,259,993No. RDI-298/DP3/1996 23,000 46,000Total 3,989,201 4,305,993

Less current maturities No. RDI-393/DP3/2001 293,793 293,793No. RDI-298/DP3/1996 23,000 23,000Total 316,793 316,793

Long-term portion 3,672,408 3,989,200

Investment Fund Account No. RDI-393/ DP3/2001 In June 20, 2000, the Company and the Government of the Republic of Indonesia agreed to restructure the overdue principal of two-step loans amounting to Rp 5,288,268 million as stated on the letter of the Ministry of Finance of the Republic of Indonesia No. S-352/MK.06/2001. The new loan is unsecured, has a period of 20 years, including 2 years grace period and bears interest at 4% per annum. The loan will be paid in semi-annual installment of Rp 146,896 million until July 30, 2021. The Government also approved the capitalization of overdue interest and penalty amounting to Rp 28,781,355 million into additional Government Equity Participation. In relation to the additional Government Equity Participation, on August 1, 2001, the Government issued Government Regulation No. 61 Year 2001. The difference of Rp 789,452 between the Government Equity Participation and the amount converted into the Company’s paid-up capital was recorded as additional paid-in capital (Note 20).

Investment Fund Account No. RDI-298/DP3/1996 The Company obtained from the Government of the Republic of Indonesia an investment loan facility of Rp 230 billion, with term of 12 years including 2 years grace period. The loan was used for prepayment of export credit in financing the development of PLTGU Muara Tawar. This loan will be paid semi-annually up to March 13, 2008 in the amount of Rp 11.5 billion and bears interest at 9% per annum for the first 6 years, and at average interest rate of 3 months Certificate of Bank Indonesia for the 6 months until a new interest rate is determined for the succeeding years.


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27. LEASE LIABILITY

This account represents payable to PT Central Java Power (CJP) in relation to Financial Lease Agreement on the acquisition of Tanjung Jati B Unit A and B power plant 2 x 660 MW.

In accordance with the lease agreement, the future minimum lease payments are as follows:

2007

Minimum lease payments due :Not later than 1 year 1,831,346

Later than 1 year and not later than 2 years 1,760,567Later than 2 years 18,605,208

Total minimum lease payments 22,197,121Less interest 7,880,674

Present value of minimum lease payments 14,316,447

Less current maturity 775,084Long-term lease liabilities - net 13,541,363

On May 23, 2003, the Company and CJP entered into an agreement to continue the development of power plant Tanjung Jati B Unit A and B. The Company and CJP also entered into a Financial Lease Agreement (FLA) which stipulates, among others, that CJP will lease the power plant for 20 years starting on its Commercial Operation Date (COD) or the date of maximum delay, for each unit, after July 31, 2003, whichever is earlier and the Company has an option to purchase the power plant on or before the end of FLA period at certain purchase price as stipulated in the Call Right Agreement. The FLA required the Company to operate the power plant in accordance with Operation and Maintenance Agreement (O&M Agreement). The acquisition cost of the leased assets is approximately JPY 184,545 million based on FLA. The semi-annual minimum lease payment amounting to Rp 404,408 million and US$ 4.23 million, before any adjustments on certain factors, among others, conversion of foreign exchange in JPY currency, interest rate and investment rate of returns in accordance with a formula stipulated in the FLA. The semi-annual minimum lease payment, after including adjustments based on the formula and condition factors at the date of FLA amounted to a total of JPY 11,289 million for both Unit A and B. In relation to the delayed COD of power plant Unit A and B, on October 1 and November 1, 2006, respectively, the term of the lease agreement was effected to become 23.5 years until March 31, 2030.

Interest expense and financing charges for three-month period ended March 31, 2007 amounted to Rp 489,620 million. These interest expense and financing charges include contingent rent of Rp 233,007 million for certain adjustment factors which include, among others, conversion of foreign exchange in JPY currency, interest rate and investment rate of returns. In relation to the FLA, The Sumitomo Mitsui Banking Corporation, Singapore acts as the Escrow Agent and Sumitomo Mitsui Banking Corporation, Tokyo acts as the Security Agent. To fulfill the requirements of FLA, the Company established a reserve account to an Escrow Agent on August 22, 2005 for guarantee of operations, maintenance and fuel procurement and on February 1, 2006 for finance lease installment prepayment. The Company is restricted by certain covenants of FLA, such as pledge of Escrow Accounts, transfer of the Company’s rights based on PLN Settlement Agreement, which will be returned if the payment of lease liabilities has been made, and recognition of CJP’s transfer of rights to its creditors, as guarantee of CJP’s obligations.

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28. BANK LOANS

2007 2006

Bank loans

Bank Bukopin 28,116 -

Bank Bumiputera Indonesia 9,100 -

Bank Rakyat Indonesia 270 4,267

Total 37,486 4,267

Less current maturities

Bank Bukopin 4,612 -

Bank Bumiputera Indonesia 9,100 -

Bank Rakyat Indonesia 270 4,267

Total 13,982 4,267

Long-term portion 23,504 -

Bank Bukopin On June 11, 2006, ICON obtained investment credit facilities amounting to 50 billion, with terms of 2 and 4 years which bear interest at 13.5% and 14.75% per annum. This facility are secured by certain property, plant and equipment of Rp 45,745 million and time deposits of Rp 5 billion in the same bank.

Bank Bumiputera Indonesia

ADC, a subsidiary of IP, obtained working capital facilities amounting to Rp 10 billion with interest rate per annum at 13% in 2007, due on March 22, 2008. This loan secured by ADC’s time deposits amounting to Rp 5,000 million and trade accounts receivable.

Bank Rakyat Indonesia ADC also obtained working capital facilities amounting to Rp 9.6 billion in 2007 and Rp 9.8 billion in 2006 with interest rate per annum at 13.5% in 2007 and 8.5% in 2006. This facility has been extended several times and will mature on August 3, 2007. This loan is secured by time deposits of IP amounting to Rp 10 billion with the same bank.


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29. BONDS PAYABLE

Details of bonds payable are as follows:

2007 2006

Guaranteed Notes, with nominal amount of US$ 550 million,

net of unamortized debt issuance costs of US$ 8.3 million 4,938,812 -Guaranteed Notes, with nominal amount of US$ 450 million,

net of unamortized debt issuance costs of US$ 4.9 million 4,058,835 -

PLN VIII Year 2006, with nominal amount of Rp 2,200,100 million, net of unamortized debt issuance costs of Rp 11,914 million 2,188,186 -

Syariah Ijarah PLN I Year 2006, with nominal amount of

Rp 200,000 million, net of unamortized debt issuance costs ofRp 1,071 million 198,929 -

PLN VII Year 2004, with nominal amount of Rp 1,500,000 million,

net of unamortized debt issuance costs of Rp 7,689 million in 2007 and Rp 8,721 million in 2006 1,492,312 1,491,279

PLN VI Year 1997, with nominal amount of Rp 600,000 million 600,000 600,000

Total 13,477,074 2,091,279Less current maturity - PLN VI Year 1997 600,000 -


Guaranteed Notes

On October 16, 2006, Majapahit Holding B.V., The Netherlands, a wholly-owned special-purpose subsidiary of the Company issued Guaranteed Notes amounting to US$ 1 billion, which consist of:

• Principal amount of US$ 550 million with issue price of 98.976%, interest rate of 7.75% per annum and due on October 17, 2016.

• Principal amount of US$ 450 million with issue price of 99.382%, interest rate of 7.25% per annum and due on October 17, 2011.

The interest is payable semi-annually starting from April 17, 2007 to the maturity date of the Guaranteed Notes.

The Guaranteed Notes are guaranteed by the Company and its subsidiaries and issued based on Indenture agreement dated October 16, 2006, among the Issuer with the Guarantors and Deutsche Bank Trust Company Americas, as trustee.

No later than 30 days following the occurrence of both an event in which the Government of Indonesia ceases to own, directly or indirectly, more than 50% of the voting securities of the Company or, if and when issued, the Class A Dwiwarna Share and an event in a rating decline (Change of Control Triggering Event), Majapahit Holding B.V. will make an offer to repurchase all Notes outstanding at a purchase price equal to 101% of their principal amount plus accrued and unpaid interest, if any, to the date of repurchase. The Guaranteed Notes are subject to redemption in whole, at 100% of their principal amount, together with any accrued interest, at the option of Majapahit Holding B.V. at any time in the event of certain changes affecting taxes changed by The Netherlands or Indonesia.


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The Indenture is governed by certain covenants, including, among others, the incurrence of additional indebtedness along with the “Ratio Exception”, that after giving effect to the permitted indebtedness, the ratio of income before interest, tax, depreciation and amortization including actuarial employment benefit (EBITDA) to consolidated interest expense is at least 2 : 1; the incurrence of liens; the payment of dividends; mergers, acquisitions and disposals.

The proceeds from the Guaranteed Notes issued were used to partially fund the capital expenditure requirements in connection with the Fast Track Program and for general corporate purposes.

The Guaranteed Notes are rated as “B1” by Moody’s Investors Service, Inc. and “BB-“ by Standard and Poor’s Rating Group.

PLN VIII Bonds Year 2006

On June 21, 2006, the Company issued PLN VIII Bonds Year 2006 Series A and B with a total nominal value of Rp 2,200,100 million. The Series A bonds have nominal value of Rp 1,335,100 million, with fixed interest rate of 13.60% per annum and a term of 10 years due on June 21, 2016. The Series B bonds have nominal value of Rp 865,000 million with fixed interest rate of 13.75% per annum and a term of 15 years due on June 21, 2021. The interest is payable on a quarterly basis, starting from September 21, 2006 to the maturity date of the bonds.

Bank Mega acts as a Trustee of the bonds, based on the Trustee Agreement No. 59, dated April 21, 2006 of Imas Fatimah S.H., a notary in Jakarta, as amended by deed No. 13 dated June 2, 2006 of the same notary. The Trustee Agreement stipulates, among others, that after one year from the issuance date, the Company is allowed to buy-back a portion or the entire bonds before the maturity date and the Company was not required to provide sinking fund for such bonds.

The proceeds from the bonds issued were used for working capital requirement which, among others, include the purchase of fuel. The bonds are not secured by specific collateral but secured by all of the Company’s assets and the bondholders’ rights are paripassu without preference to the other creditors.

Syariah Ijarah PLN I Bonds Year 2006

On June 21, 2006, the Company also issued Syariah Ijarah PLN I Bonds Year 2006 with a nominal value of Rp 200,000 million, with a term of 10 years due on June 21, 2016 and quarterly installment of Ijarah fee.

Bank Mega acts as a Trustee of the bonds, based on the Trustee Agreement No. 62 dated April 21, 2006 of Imas Fatimah S.H., a notary in Jakarta, as amended by deed No. 16 dated June 2, 2006 of the same notary. The Trustee Agreement stipulates, among others, that the Company has agreed to transfer benefits obtained from certain transformers of the Company to the bondholders, and the bondholders has agreed to provide the Company a power of attorney to enter into agreements with transformer users for the benefits of the bondholders. The Company also received a power of attorney from the Trustee to enter into agreements with the transformer users to collect the related receivables. After one year from the issuance date, the Company is allowed to buy-back a portion or the entire bonds before the maturity date. The Company was not required to provide sinking fund for such bonds.

The proceeds from the bonds issued were used for working capital requirement which, among others, include the purchase of fuel. The bonds are not secured by specific collateral but secured by all of the Company’s assets and the bondholders’ rights are paripassu without preference to the other creditors.

PLN VII Bonds Year 2004

On November 11, 2004, the Company issued PLN VII Bonds Year 2004 amounting to Rp 1.5 trillion, with fixed interest rate at 12.25% per annum and a term of 10 years due in 2014. The interest is payable quarterly starting from February 11, 2005 until November 11, 2014 which is also the maturity date of the bond.


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Bank Niaga acts as a Trustee of the bonds, based on the Trustee Agreement No. 9 dated October 1, 2004 of Imas Fatimah S.H., a notary in Jakarta as amended by deed No. 55 dated October 26, 2004 of the same notary. The Trustee Agreement stipulates, among others, that after one year from the issuance date, the Company is allowed to buy-back either a portion or the entire bonds before the maturity date.

The proceeds from the bonds issued were used to refinance the PLTG Muara Tawar Project. The bonds are not secured by specific collateral but secured by all of the Company’s assets and the bondholders’ rights are paripassu without preference to other creditors. PLN VI Bonds Year 1997 In 1997, the Company issued 1,400 units of PLN VI Bonds Year 1997 Series A, B and C amounting to a total of Rp 600 billion, with fixed and floating interest rates and a term of 10 years due on August 8, 2007. Bank Mandiri acts as a Trustee of the bonds, based on the Trustee Agreement as stated in notary deed No. 61 dated May 19, 1997 of S.P. Henny Singgih, S.H., a notary in Jakarta, as amended by deed No. 7 dated February 3, 2000 of the same notary. The Trustee Agreement stipulates, among others, the calculation of the interest as follows: a. Series A bonds bearing fixed interest rate for 10 years which is calculated based on the 10 years

Rupiah Swap from Asean Interest Rate Swap as indicated in the Reuter page EROT plus premium of 1.4%.

b. Series B bonds bearing floating interest rate based on the average interest rate of 6 months time

deposits at Bank Negara Indonesia, Bank Tabungan Negara, Bank Mandiri, Bank Niaga, and Bank Permata (formerly Bank Bali), which is calculated based on the average rates of the 5 working days before the date of the bond’s interest rate determination, plus fixed premium of 1%.

c. Series C bonds bearing fixed interest rate based on the 6 months IRSOR and calculated based on

the average rate of the 5 working days before the date of the bond’s interest rate determination, plus fixed premium of 1.4%.

The interest is payable semi-annually starting from January 20, 1998. The proceeds from the bonds issued were used to finance the transmission projects in Jakarta, West Java, Central Java and East Java. These bonds are secured by the Company’s trade accounts receivable and landrights and buildings thereon. Based on the Bondholders General Meeting as stated in deed No. 23 dated July 14, 2004 of Imas Fatimah S.H., a notary in Jakarta, the Bondholders agreed, among others, on the : • Withdrawal of all collaterals which consist of landrights and buildings and part of trade accounts

receivable and to replace those collaterals with trade accounts receivable at 120% of bonds principal.

• Payment of additional interest premium at 0.25% for a one time payment of interest after the

Bondholders General meeting. As of March 31, 2007, the Company obtained a bond rating of idA (Single A) from PT Pemeringkat Efek Indonesia on PLN VIII Bonds Year 2006, Syariah Ijarah PLN I Bonds Year 2006 and PLN VI Bonds Year 1997, and a bond rating of A (Single A) from PT Kasnic Credit Rating Indonesia on PLN Bonds VII Year 2004.


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In relation to the issuance of PLN VIII Bonds Year 2006, Syariah Ijarah PLN I Bonds Year 2006 and PLN VII Bonds Year 2004, the Company is restricted by certain covenants, which require written approval from the Trustee to: (a) use the Company’s assets as collateral; (b) act as a guarantor; (c) grant loan to other party; (d) perform merger, consolidation and acquisition that would cause the Company to be dissolved; (e) transfer the Company’s property, plant and equipment, and allow subsidiaries to grant loan to other party or to make an investment; (f) issue new higher ranking bonds; and (g) change the business activities and decrease the Company’s authorized, subscribed and paid-up capital. The Company is also required to maintain the following: (a) ratio of total financial liabilities to total assets not exceeding 80%; (b) ratio of income before interest, tax and depreciation and amortization, including actuarial employment benefit (EBITDA) to interest expense at a minimum of 2 : 1; and except for PLN VII Bonds Year 2004, (c) ratio of power plant, transmission and distribution facilities to interest-bearing liabilities which are not secured by specific collaterals (excluding two-step loans and government loans) at a minimum of 150%.

30. ELECTRICITY PURCHASE PAYABLE (INDEPENDENT POWER PRODUCER)

In March 1998, the Company deferred the settlement of electricity purchase payable to the amount as stated in Power Purchase Agreement (PPA) and Energy Sales Contract (ESC). In 1999, the Company established a Working Group on Special Contract Renegotiation (Kelompok Kerja Renegosiasi Kontrak Khusus) under Government’s direction in order to facilitate the renegotiation of electricity price as previously agreed in PPA and ESC. The Company has successfully renegotiated the electricity price with all of independent power producers (Note 53). The details of restructured trade accounts payable to independent power producers are as follows :

a. By Creditor

2007 2006

PT Paiton Energy (US$ 694,828,088 in 2007 and US$ 709,020,264

in 2006) 6,335,105 6,434,430PT Jawa Power (US$ 57,932,459 in 2007 and US$ 58,026,935 in 2006) 528,228 526,594

Magma Nusantara Ltd. and Pertamina (US$ 25,000,000) 227,950 -Total 7,091,283 6,961,024

Less current maturities (376,322) (140,909)


b. By Installment Payments 2007 2006

Payment due on years

2006 - 400,2082007 630,054 533,610

2008 536,138 533,610

2009 and thereafter 12,384,068 12,317,497

Total payments 13,550,260 13,784,925Less interest (6,458,977) (6,823,901)

Present value of payments 7,091,283 6,961,024

Less current maturities (376,322) (140,909)Long-term portion 6,714,961 6,820,115


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31. PAYABLE TO RELATED PARTIES

2007 2006

Yayasan Pendidikan dan Kesejahteraan - PLNLoan 37,325 16,800

Acquisition of stock - 11,500PT Mitra Energy Batam 12,989 13,455

Employees 82,853 49,355Total 133,167 91,110

Yayasan Pendidikan dan Kesejahteraan – PLN (YPK) ICON and PLNE obtained foster fund from YPK amounting to Rp 37,325 million and Rp 16,800 million as of March 31, 2007 and 2006, respectively. This loan bears administration fee rate ranging from 12% to 16% per annum and will be paid through fixed installment until the period between September 2008 to August 2010.

PT Mitra Energy Batam (MEB) Payable to MEB consists of payable on purchase of switchgear.

Employee Cooperative Payable to employee cooperative mainly represents vehicle and computer rentals and building and yard maintenance.

Employees Payable to employees mainly represents advance receipt from employees on house sale.

32. PROJECT COST PAYABLE This account represents payables arising from construction of property and equipment and purchases of materials. This account will be reclassified into two-step loans account when the Company receives the Withdrawal Authorization (WA) or other documents with similar authority as the WA.


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33. TRADE ACCOUNTS PAYABLE This account represents payables arising from purchases of electricity, fuel, goods and services, as follows :

a. By Creditor

2007 2006

Related parties (Note 50)Purchases of electricity

PT Sumber Segara PrimadayaRupiah 64,238 -US$ 96,898 14,110

PT Geo Dipa Energi 1,109 18,204PT Dalle Energy Batam 21,948 9,235PT Mitra Energy Batam 7,327 6,599

Purchases of fuel, goods and services PT Daya Citra Mulia 8,013 4,461Koperasi Karyawan 14,104 15,807

Total of trade accounts payable to related parties 213,637 68,416

Third parties Purchases of electricity

PT Paiton Energy Rupiah 303,335 239,493US$ 592,428 601,060

PT Jawa Power Rupiah 266,519 277,492US$ 490,593 509,222

Chevron Geothermal Salak Ltd. and Dayabumi Salak Pratama Ltd.US$ 132,957 134,983

Pertamina and Magma Nusantara LtdUS$ 72,322 2,897,516

Others (each below 5% of subtotal) Rupiah 166,210 47,500US$ 145,079 150,895

Subtotal 2,169,443 4,858,161

Purchases of fuel, goods and services Pertamina

Rupiah 20,428,329 16,602,208US$ 215,363 601,625

PT Tambang Batubara Bukit Asam 617,949 173,263Others (each below 5% of subtotal)

Rupiah 2,242,997 2,403,807US$ 159,990 136,575EUR 40,215 16,326JPY 6,575 6,525

Subtotal 23,711,418 19,940,329

Total of trade accounts payable to third parties 25,880,861 24,798,490

Total trade accounts payable 26,094,498 24,866,906


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b. By Age Category 2007 2006

1 - 180 days 25,888,292 21,780,863181 - 360 days 87,245 519,275More than 360 days 118,961 2,566,768Total 26,094,498 24,866,906

Details of trade accounts payable in foreign currencies are as follows :


US$ 209,117,964 1,906,738 558,011,118 5,063,951EUR 3,308,701 40,215 1,498,202 16,326JPY 84,764,499 6,575 84,764,499 6,525Total 1,953,528 5,086,802

2007 2006

*) In full amount

As of March 31, 2006, payable to PT Pertamina and Magma Nusantara Limited (Joint Operation) for the Wayang Windu project is based on the tariff stated in the Energy Sales Contract and certain Interim Tariff Payments agreed by the Company and the Joint Operation since May 16, 2000. On November 21, 2006, the Company and the Joint Operation agreed to finalize a binding amendment on the Wayang Windu Geothermal Energy Sales Contract.

34. OTHER PAYABLES

2007 2006

Difference on fuel purchasing price in excess of quota 408,739 635,817

Public street lights 319,226 301,704

Advance sales of electricity 499,118 350,365Acquisition of property, plant and equipment

Rupiah 156,836 164,775

US$ - US$ 10,391,572 in 2007 and US$ 13,861,149 in 2006 94,750 125,790

Others 445,964 300,553

Total 1,924,633 1,879,004

Less long-term portion

Difference on fuel purchasing price in excess of quota 272,493 454,155

Acquisition of property, plant and equipment 165,904 253,702

Total 438,397 707,857

Current maturities 1,486,236 1,171,147

Payable due to difference on fuel purchasing price in excess of quota represents 25% of the market price for purchasing fuel above quota as determined by Pertamina in 2002 amounting to Rp 726,648 million. Based on the decision of the General Meeting of Shareholders in 2005, the Company was required to settle such payable. Accordingly, the price differences were charged to the 2005 operations (Note 46). This payable will be paid in 16 quarterly installments of Rp 45,415 million each from September 2005 until June 2009.


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35. TAXES PAYABLE

2007 2006

Current tax (Note 47) 2007 241,082 -2006 817,717 186,7812005 - 462,1722004 203 27,088

Income taxes Article 21 25,090 13,680Article 22 5,176 4,016Article 23 25,121 53,993Article 15, 25 and 26 5,279 2,584Article 29 for the year 2005, 2001 and 1998 1,282 -

Value added tax 32,228 37,029Stamp duty 5,489 5,026Land and building taxes 2,157 3,391Tax on revaluation increment on property, plant and equipment -

current maturities 34,893 2,342,248Total 1,195,717 3,138,008

The tax payable on revaluation increment on property, plant and equipment as of March 31, 2006 consists as follows:

The Company Subsidiaries Total

Beginning balance 688,959 1,953,289 2,642,248Less cash payments - (300,000) (300,000)

Ending balance 688,959 1,653,289 2,342,248Less current maturities (688,959) (1,653,289) (2,342,248)Long-term portion - - -

The Company and its subsidiaries are obliged to pay interest on the final income tax payable in respect of the revaluation increment. Interest on final income tax payable amounted to Rp 1,863,754 million in 2006, which was due on December 15, 2006. Interest on the final income tax payable amounted to Rp 465,939 million for the three-month periods ended March 31, 2006, were presented as accrued expenses, while the corresponding interest expense were presented as interest expense and financing charges (Note 45). Based on the Fund Withdrawal Instruction Letter issued by the Directorate General of Treasury No. 003813Z/999/100 dated December 28, 2006, the interest on tax payable which was due on December 15, 2006 amounting to Rp 1,863,754 million was assumed by the Government. Accordingly, such interest assumed by the Government was recognized as other income.

36. ACCRUED EXPENSES

2007 2006

Interest and financing charges Lease liability 465,665 -Tax payable on revaluation increment on property, plant and equipment - 465,939Contingent rent on lease liability 425,432 -Two-step loans 361,277 247,911Government loans 4,695 23,156Bonds payable 390,875 33,340Electricity purchase payable 41,742 2,110

Total 1,689,686 772,456Operational expenses 112,510 75,128

Total 1,802,196 847,584


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Details of accrued expenses in foreign currencies are as follows :

Original Rp Original Rp

currency *) equivalent currency *) equivalent

US$ 65,215,298 594,633 5,536,497 50,244JPY 11,489,939,034 891,355 1,324,360,458 101,947EUR 1,214,306 14,759 2,166,148 23,595Others **) 723,161 6,594 1,180,578 10,714

Total 1,507,341 186,500

2007 2006

*) In full amount

**) Accrued expenses denominated in other foreign currencies are presented as US$ equivalents using the exchange rates prevailing at balance sheet date.

37. REVENUE FROM SALE OF ELECTRICITY Sale of electricity by customers are as follows :

2007 2006

Public 16,713,947 15,551,759

Government 715,938 673,229

State-owned enterprises 585,799 507,716

Indonesian Armed Forces 105,167 105,355Total 18,120,851 16,838,059

Revenue from sale of electricity is based on basic electricity tariffs determined by the Government. The Company has no customer from which the Company obtains revenue of more than 10% of total sale of electricity.

38. GOVERNMENT’S ELECTRICITY SUBSIDY

The Government of Indonesia has provided electricity subsidy to customers through the Company. The guidance for calculation and payment of electricity subsidy is set in the Rule of Minister of Finance of the Republic of Indonesia No. 126/PMK.02/2006 dated December 15, 2006 for budget year 2006. The electricity subsidy is computed as the negative difference between the average sales prices (Rp/kwh) of each tariff category less the cost of electricity supplies on the voltage for each tariff category multiplied by the electricity sales volume (kwh) of each tariff category. The cost of electricity supplies is computed based on the formula, including the rate of transmission and distribution losses which is determined by the Directorate General of Electricity and Energy Consumption under the Ministry of Energy and Mineral Resources. The Rule is also effective for the budget year 2007 until such Rule is changed.


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On February 20, 2007, the Government determined the 2007 electricity subsidy amounting to Rp 21.6 trillion, which is allocated to the 2007 budget year in accordance with the Approval Letter of Budget Performance List (DIPA) for the budget year 2007. Based on the Approval Letter of Budget Performance List (DIPA) for the budget year 2006, the electricity subsidy plafond was determined amounting to Rp 31.24 trillion. Furthermore, on February 20, 2007, the Government has also increased the 2006 electricity subsidy plafond to Rp 35.5 trillion. The increase amounting to Rp 4.26 trillion was allocated to the 2007 budget year. The Company computed the electricity subsidy in accordance with the above formula resulting to the electricity subsidy amounts of Rp 6,775,461 million in 2007 and Rp 5,146,212 million in 2006. The final amount of electricity subsidy in a budget year is based on the result of the compliance audit of the usage of the electricity subsidy performed by an auditor assigned by the Directorate General of Budged under the Ministry of Finance. The final amount of the electricity subsidy could be different from the amount of electricity subsidy which had been recognized as revenue by the Company.

39. OTHER REVENUES

2007 2006

Transformer rental 13,270 22,393

Upgrading of electricity power and administration fees 21,385 12,269

Services and others 141,556 91,614Total 176,211 126,276

40. FUEL AND LUBRICANTS

2007 2006

Fuel Solar High Speed Diesel 9,036,076 8,514,281Residue 1,743,806 1,802,690Solar Industrial Diesel 18,550 13,776Others 11,021 5,203

Total 10,809,453 10,335,950

Non fuel Natural gas 848,168 948,613Coal 1,603,774 1,195,882Geothermal 386,426 331,213Lubricants 49,473 45,322Water 17,302 19,450

Total 2,905,143 2,540,480

Total 13,714,596 12,876,430

All fuel, which represents more than 10% of the total fuel and lubricants expense, are purchased from Pertamina.


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41. ELECTRICITY PURCHASES

2007 2006

PT Paiton Energy 1,338,523 1,292,080PT Jawa Power 1,186,484 1,212,295PT Sumber Segara Primadaya 425,053 14,107Chevron Geothermal Salak Ltd. and Dayabumi

Salak Pratama Ltd. 207,519 201,170PT Asrigita Prasarana 115,609 129,332PT Energy Sengkang 112,631 122,361Pertamina and Magma Nusantara Ltd. 102,353 199,664Pertamina, Chevron Drajat Ltd., Texaco Drajat Ltd.

and PT Drajat Geothermal Ind. 96,852 88,827PT Makassar Power 85,386 70,802PT Cikarang Listrindo 51,855 57,640PT Dalle Energy Batam 49,833 18,381PT Mitra Energy Batam 19,536 18,179PT Indo Matra Power 17,780 -PT Geo Dipa Energy 12,547 18,542PO Jatiluhur 10,604 28,520PT Metaepsi Pejebe Power Generation 8,969 -Others - diesel rental 247,093 219,280Total 4,088,627 3,691,180

The details of suppliers which represent more than 10% of the total purchases of electricity are as follows :

% *) % *)

PT Paiton Energy 1,338,523 32.74 1,292,080 35.11PT Jawa Power 1,186,484 29.02 1,212,295 32.85PT Sumber Segara Primadaya 425,053 10.40 14,107 0.38

Total 2,950,060 72.16 2,518,482 68.34

2007 2006

42. MAINTENANCE EXPENSES This account represents spare parts used and contractor fees for maintenance purposes.

2007 2006

Spare parts used 644,770 592,185Contractor fees 477,330 390,203Total 1,122,100 982,388

43. PERSONNEL EXPENSES

2007 2006

Employee benefits (Note 49) 637,127 556,384

Salaries 362,069 269,001

Allowances 358,929 290,201

Bonus, performance and incentives 24,092 9,049

Others 203,272 230,455Total 1,585,489 1,355,090


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44. OTHER OPERATING EXPENSES

2007 2006

Data processing 132,346 113,318

Honorarium 101,393 67,754

Travel 91,984 86,094

Technological information 56,867 26,842

Billing collection and orderliness of of electricity used 51,896 60,726

Postage, telephone and telegraph 47,161 15,406

Consumables 44,945 38,880

Rent 42,106 50,802

Gas, electricity and water 40,445 38,566

Stationeries 34,575 25,076

Insurance 32,786 36,331

Marketing 23,327 9,764

Dues and security 22,446 10,532

Printing materials and promotion 20,157 13,109

Vehicles 14,627 22,095

Provision for doubtful accounts 6,959 32,550

Others 97,150 67,683Total 861,170 715,528

45. INTEREST EXPENSE AND FINANCING CHARGES

2007 2006

Lease liability 489,620 -

Bonds payable 344,562 56,572

Two-step loans 201,501 196,137

Electricity purchase payable 101,939 61,236

Government loans 40,310 41,610

Bank loans 1,884 678

Tax payable on revaluation increment on property, plant

and equipment - 465,939

Others 1,434 1,094Total 1,181,250 823,266

46. OTHER INCOME (EXPENSES) - NET

2007 2006

Administrative penalty income 84,229 69,006

Claim and service income 15,615 21,633

Fees for street lights 11,084 9,080

Gain on sale of property, plant and equipment 760 695

Equity in net gain (loss) of associates (Note 6) 5,774 (5,509)

Research (451) (392)

Loss on impairment of property, plant and equipment (Note 7) (119,286) (102,366)

Others (33,179) (34,919)Total (35,454) (42,772)


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47. INCOME TAX Tax expense of the Company and its subsidiaries consist of the following :

2007 2006

Current tax 264,646 191,824Deferred tax 150,670 477,557Total tax expense 415,316 669,381

Current Tax A reconciliation between income (loss) before tax per consolidated statements of income and accumulated tax losses is as follows:

2007 2006

Income (loss) before tax per consolidated

statements of income (435,808) 1,721,307

Income before tax attributable to subsidiaries (1,144,600) (1,299,566)

Income (loss) before tax - the Company (1,580,408) 421,741

Temporary differences :Lease expenses 431,483 -

Customer connection fees 102,569 104,402

Depreciation (1,048,798) (990,715)Employee benefits 365,436 322,579

Provision for doubtful accounts and decline in value

of inventories 4,685 30,833Amortization of bonds issuance costs (1,301) -

Nondeductible expenses (nontaxable income):

Benefits in kind 102,422 55,238Depreciation of guest house 2,313 2,269

Interest income subjected to final tax (96,990) (31,388)

Other nondeductible expenses 71,571 53,611Tax loss before tax loss carryforward (1,647,018) (31,430)

Tax losses for the year 2006 (7,233,904) (10,409,554)

2005 - net of adjustment (5,291,969) -

2004 - net of adjustment - (7,618,742)2003 (3,594,188) (3,594,188)

2002 - net of adjustment (5,960,838) (8,254,356)

Accumulated tax losses - the Company (23,727,917) (29,908,270)


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Current tax expense and payable (prepaid tax) are as follows :

2007 2006

Current tax expense

The Company - -

Subsidiaries 264,646 191,824

Total 264,646 191,824

Less prepaid taxes

The Company

Income tax

Article 22 - 55

Article 23 377 41

Fiscal exit - 68

Total 377 164


Total 25,219 12,382

Current tax expense net of prepaid taxes 239,427 179,442

Details

Current tax payable

The Company - -


Total current tax payable 241,082 186,781

Income tax overpayment

The Company (377) (164)

Subsidiaries (1,278) (7,175)

Total income tax overpayment (1,655) (7,339)

Total - Net 239,427 179,442

Deferred Tax

The deferred tax charged (credited) to income during the period is as follows:

2007 2006

Depreciation of property, plant and equipment 422,527 550,910

Employee benefits (102,792) (106,389)

Leases (129,445) -

Customer connection fees (31,554) (33,345)

Tax losses 3,913 70,232

Others (11,979) (3,851)Total 150,670 477,557


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Deferred tax balances are presented in the balance sheets as follows : Deferred Tax Assets This account represents deferred tax assets after deducting the deferred tax liabilities from the related entity as follows:

2007 2006

Deferred tax assets Deferred income 44,413 38,159

Tax losses 75,660 25,672Employee benefits obligation 1,771 1,124

Others 7,908 7,300Total 129,752 72,255

Deferred tax liabilities

Property, plant and equipment (71,813) (63,820)

Deferred tax assets 57,939 8,435

Deferred Tax Liabilities This account represents deferred tax liabilities after deducting the deferred tax assets from the related entities as follows:

2007 2006

Deferred tax assets

Employee benefits obligation 3,961,635 3,651,077

Tax losses - 77,981Deferred income 1,860,999 1,750,750

Leases 24,989 -

Others 4,657 4,547

Total 5,852,280 5,484,355

Deferred tax liabilities

Prepaid pension (53,303) (72,771)

Property, plant and equipment (13,370,155) (11,259,189)

Others (793) -

Total (13,424,251) (11,331,960)

Deferred tax liabilities (7,571,971) (5,847,605)


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A reconciliation between the total tax expense and the amounts computed by applying the prevailing tax rates to income (loss) before tax is as follows:

2007 2006

Income (loss) before tax per consolidated

statements of income (435,808) 1,721,307Income before tax attributable to subsidiaries (1,144,600) (1,299,566)

Income (loss) before tax - the Company (1,580,408) 421,741

Tax expense at prevailing rate (474,123) 126,522

Tax effect of

Unrecognized deferred tax on

Tax losses 494,106 9,429Provision for doubtful accounts and decline in value

of inventories 1,405 9,250

Recognition of prior year's deferred tax liabilities - 111,701Nondeductible expenses (nontaxable income)

Benefits in kind 30,727 16,571

Depreciation of guest house 694 681Interest income subjected to final tax (29,097) (9,416)

Other nondeductible expenses 21,471 16,083

Tax expense - the Company 45,183 280,821Tax expense - subsidiaries 370,133 388,560

Total 415,316 669,381

Unrecognized deferred tax asset is as follows:

2007 2006

The Company

Tax losses 7,118,375 8,972,481

Others 94,387 103,430

Total 7,212,762 9,075,911

Subsidiaries - tax losses - 81,224

Total 7,212,762 9,157,135

The Company does not have a sufficient basis to determine the future tax benefit on the deferred tax asset. The deferred tax asset will be recognized in the consolidated financial statements when the taxable income becomes available in future periods.

Tax Assessment Letter

On May 22, 2007, the Company received a tax assessment letter for underpayment (SKPKB) of income tax article 4 section 2, article 21, article 23 and value added tax for the year 2005 amounting to a total of Rp 6,764 million. The Company also received a tax assessment letter for the overpayment of corporate income tax (SKPLB) amounting to Rp 1,751 million and for the tax loss of Rp 5,291,969 million for the year 2005.


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In 2006, the Company received a tax assessment letter for underpayment (SKPKB) of income tax article 21, article 23 and value added tax for the year 2004 amounting to a total of Rp 4,662 million. The Company paid this SKPKB on September 12, 2006. The Company also received a tax assessment letter for the overpayment of corporate income tax (SKPLB) amounting to Rp 821 million and for the taxable income of Rp 2,293,518 million for the year 2004. Such taxable income was offset against the 2002 tax loss carryforward. In 2006, IP received SKPKB and Tax Collection Notice (STP), for corporate income tax, final income tax article 4 section 2, article 21, article 23 and value added tax for year 2004, amounting to a total of Rp 1,139,246 million. IP filed objection letters on these SKPKB and STP to the Director General of Tax. In 2005, IP received SKPKB and STP for underpayment of value added tax, final income tax article 4 section 2, article 21, article 23 and 26 for the years 2002 and 2001, amounting to a total of Rp 313,953 million. IP filed objection letters on these SKPKB and STP. In 2006, the Director General of Tax denied these objection letters. IP filed an appeal for an amount of Rp 124,963 million. Since IP has filed objection letters and tax appeal, the payment made by IP on SKPKB and STP amounting to a total of Rp 127,594 million and Rp 212,193 million as of March 31, 2007 and 2006, respectively, were presented as prepaid taxes and no tax liabilities have been recognized.

48. EARNINGS (LOSS) PER SHARE Earnings (Loss) Net earnings (loss) for the computation of basic earnings (loss) per share amounted to (Rp 18,460) in 2007 and Rp 22,815 in 2006. Number of shares The weighted average number of shares for the computation of basic earnings (loss) per share was 46,107,154 shares in 2007 and 2006. The Company did not calculate dilutive earnings (loss) per share because it has no potential dilutive ordinary shares.

49. EMPLOYEE BENEFITS Post-employment Benefits Pension Plan The Company and its subsidiaries established a defined benefit pension plan covering all their permanent employees. This plan provides pension benefits based on salaries and years of service of the employees. The pension plan is managed by Dana Pensiun PLN (Persero) (DP-PLN), which deed of establishment was approved by the Ministry of Finance of the Republic of Indonesia in its decision letter No. KEP-284/KM.17/1997 dated May 15, 1997. DP-PLN obtained an approval from the Minister of Finance of the Republic of Indonesia No. KEP-078/KM.12/2006 dated on August 29, 2006 in relation to the increase in pension benefits provided by the Company and its subsidiaries’ pension plan. DP-PLN is mainly funded by contributions from both the employees, which is 6% in both 2007 and 2006 and the employer, which is 6.25% - 8.91% in 2007 and 2006.


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Other Post-employment Benefits The Company and its subsidiaries also provide other unfunded defined post-employment benefit plans such as severance pay, service pay, compensation pay, additional allowance and functional retirement pay for their qualifying employees based on the Company and its subsidiaries’ policies. These other post-employment benefits are computed based on the salaries and service years of the employees. Health Care Benefits In addition to the pension plan managed by DP-PLN and the other post-employment benefits, the Company and its subsidiaries also provide unfunded defined health care plans for their pensioners and their eligible dependents. Other Long-term Benefits The Company and its subsidiaries also provide unfunded defined other long-term benefit plans such as long service leave, work accident, death and funeral allowances, and eight years service award for their qualifying employees. The cost of providing post-employment and other long-term benefits were calculated by an independent actuary, PT Binaputera Jaga Hikmah. The actuarial valuation was carried out using the following key assumptions:

Normal retirement age : 56 years

Expected rate return on plan assets : 11%

Discount rate per annum : 11% Rate of salary increase per annum

Pension plan : 5%

Other post-employment and long-term benefits : 8% Rate of health cost increase : 15% in 2007 and 18% in 2006, decreasing

linearly by 3% each succeeding year until 2009

The Company and its subsidiaries’ employee benefit expenses charged to personnel expenses, are as follows :

Other

Pension Other post- Health long-term

plan employment care benefits benefits Total

Current service cost 15,355 68,918 41,118 40,829 166,220Past service cost 5,894 6,436 - - 12,330

Expected return on plan assets (98,018) - - - (98,018)

Interest costs 79,232 172,635 149,568 18,645 420,080

Actuarial losses (gains) (8,737) 846 4 76,373 68,486

Deferred asset due to asset limitation 68,029 - - - 68,029Total 61,755 248,835 190,690 135,847 637,127

2007Post-employment benefit


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Other

Pension Other post- Health long-term

plan employment care benefits benefits Total

Current service cost 16,697 61,297 41,332 37,666 156,992

Past service cost 6,914 6,436 - - 13,350

Expected return on plan assets (88,396) - - - (88,396)

Interest costs 97,102 151,386 170,691 17,819 436,998

Actuarial losses 1,159 287 7,428 22,906 31,780

Deferred asset due to asset limitation 5,660 - - - 5,660Total 39,136 219,406 219,451 78,391 556,384

2006

Post-employment benefit

The Company and its subsidiaries employee benefit obligations (prepaid pension) are as follows:

Prepaid employee

benefit, Other post- Health Other

pension plan employee care benefits long-term Total

Present value of obligation 2,991,366 7,273,370 6,358,950 770,472 14,402,792

Unrecognized past service cost (193,312) (269,315) - - (269,315)Unrecognized actuarial gains

(losses) 586,101 (626,217) (296,305) - (922,522)

Fair value of plan assets (3,670,804) - - - -

Deferred asset due to asset

limitation 108,972 - - - -Employee benefit obligations

(prepaid pension) (177,677) 6,377,838 6,062,645 770,472 13,210,955

2007

Employee benefit obligations

Prepaid employee



Present value of obligation 3,200,388 5,879,706 6,246,240 676,791 12,802,737

Unrecognized past service cost (235,396) (295,058) - - (295,058)Unrecognized actuarial gains

(losses) 98,635 482,290 (815,707) (257) (333,674)

Fair value of plan assets (3,311,857) - - - -

Deferred asset due to asset

limitation 5,660 - - - -Employee benefit obligations

(prepaid pension) (242,570) 6,066,938 5,430,533 676,534 12,174,005

2006



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Movements in the Company and its subsidiaries’ employee benefit obligation (prepaid pension) are as follows:

Prepaid employee



Beginning balance (217,406) 6,298,361 5,892,439 677,911 12,868,711

Expense for the period 61,755 248,835 190,690 135,847 575,372

Payments of contribution (22,026) - - - -

Payments benefits - (169,358) (20,484) (43,286) (233,128)

Ending balance (177,677) 6,377,838 6,062,645 770,472 13,210,955

Current maturities 169,132 (868,202) (129,322) (260,995) (1,258,519)Long-term portion (8,545) 5,509,636 5,933,323 509,477 11,952,436

2007


Prepaid employee



Beginning balance (253,439) 5,918,719 5,250,897 648,098 11,817,714

Expense for the period 39,136 219,406 219,451 78,391 517,248

Payments of contribution (28,267) - - - -

Payments benefits - (71,187) (39,815) (49,955) (160,957)

Ending balance (242,570) 6,066,938 5,430,533 676,534 12,174,005

Current maturities 230,504 (482,652) (322,324) (340,040) (1,145,016)Long-term portion (12,066) 5,584,286 5,108,209 336,494 11,028,989

2006


50. TRANSACTIONS WITH RELATED PARTIES

The Company and its subsidiaries do not need to disclose the transactions with State-owned/Regional-owned enterprises as transactions with related parties in accordance with Statement of Financial Accounting Standards (SFAS) No. 7 “Related Party Disclosure”. In the normal course of business, the Company and its subsidiaries entered into transactions with related parties. All significant transactions with related parties, whether or not done at normal prices and conditions as those done with third parties, are disclosed in the consolidated financial statements. Summary of the nature and transactions with related parties according to SFAS No. 7 include the following :


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Transactions with Related Parties

Notes

% *) % *)

Receivables from related parties 8

PT Sumber Segara Primadaya 522,533 0.20% 484,241 0.22%

PT Tenaga Listrik Jayapura 10,561 0.00% - -

PT Tenaga Listrik Bintan 11,571 0.00% - -

PT TJK Power 18,614 0.01% - -

PT Dalle Energy Batam 14,870 0.01% - -

PT Bajradaya Sentranusa 5,035 0.00% 5,035 0.07%

PT Mitra Energy Batam 2,857 0.00% - -

Directors and employees 644,362 0.25% 561,271 0.10%

Subtotal 1,230,403 0.47% 1,050,547 0.39%

Trade accounts payable 33


PT Geo Dipa Energi 1,109 0.00% 18,204 0.02%

PT Dalle Energy Batam 21,948 0.02% 9,235 0.01%

PT Mitra Energy Batam 7,327 0.01% 6,599 0.01%

PT Daya Citra Mulia 8,013 0.01% 4,461 0.01%

Koperasi Karyawan 14,104 0.01% 15,807 0.01%

Subtotal 213,637 0.21% 68,416 0.06%

Payable to related parties 31

Yayasan Pendidikan dan

Kesejahteraan - PLN 37,325 0.04% 16,800 0.02%

Acquisition of stock - - 11,500 0.01%

PT Mitra Energi Batam 12,989 0.02% 13,455 0.02%

Employees 82,853 0.09% 49,355 0.06%

Subtotal 133,167 0.15% 91,110 0.11%

Total 346,804 0.36% 159,526 0.17%

Electricity purchases 41


PT Dalle Energy Batam 49,833 1.22% 18,381 0.50%

PT Geo Dipa Energi 12,547 0.31% 18,542 0.50%

PT Mitra Energy Batam 19,536 0.48% 18,179 0.49%

Total 506,969 12.41% 69,209 1.87%

Coal purchases 40

PT Daya Citra Mulia 39,603 0.29% 30,728 0.24%

Building rent 44

Yayasan Pendidikan dan

Kesejahteraan - PLN 6,733 0.78% 8,506 1.19%

*) Percentage to the related total assets/liabilities/expenses

2007 2006


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Nature of related parties a. The Company and its subsidiaries have associates as identified in Note 6.

b. Management of Employee Cooperative is composed of the Company and its subsidiaries’

employees. c. The founders and controllers of Yayasan Pendidikan dan Kesejahteraan PT PLN (Persero) (YPK)

are composed of management and employees of the Company and its subsidiaries.

d. Officers are people who have authority and responsibility for planning, directing and controlling the activities of the Company.

51. MONETARY ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

At March 31, 2007, the Company and its subsidiaries have monetary assets and liabilities denominated in foreign currencies, as follows:

JPY *) USD *) EUR *) Others **)

Monetary assets

Related party receivables - 59,735,304 - -

Restricted cash in bank and time deposits 42,324,888,953 137,416,321 - -

Cash and cash equivalent 46,430,048 990,066,969 2,035,371 393,216

Short-term investment - 5,200,000 - -

Total monetary assets 42,371,319,001 1,192,418,594 2,035,371 393,216

Monetary liabilities

Two-step loans 25,115,141,584 716,241,088 125,764,864 57,395,411

Lease liability 184,545,000,000 - - -

Bonds payable - 986,800,504 - -

Electricity purchase payable - 777,760,547 - -

Other payables - 10,391,572 - -

Project cost payable 1,964,262,100 38,525,318 16,663,778 1,075,598

Trade accounts payable 84,764,499 209,117,964 3,308,701 -

Accrued expenses 11,489,939,034 65,215,298 1,214,306 723,161

Total monetary liabilities 223,199,107,217 2,804,052,291 146,951,649 59,194,170

Net monetary liabilities (180,827,788,216) (1,611,633,697) (144,916,278) (58,800,954)

Rupiah equivalent (in millions) (14,028,620) (14,694,876) (1,761,356) (536,147)

Total in Rupiah - net (in millions) (31,020,999)

2007

*) In full amount **) Assets and liabilities denominated in other foreign currencies are presented as US$ equivalent using the

exchange rate prevailing at balance sheet date


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On the balance sheets date, the conversion rates used by the Company and its subsidiaries are as follows:

2007 2006

Rp *) Rp *)Currencies

USD 9,118 9,075Yen 78 77EUR 12,154 10,893

*) In full amount

In relation to the fluctuation of Rupiah against foreign currencies, the Company and its subsidiaries recorded net loss on foreign exchange of Rp 570,108 million in 2007 and gain on foreign exchange of Rp 2,367,039 million in 2006.

52. SEGMENT INFORMATION

Geographical Segments For management purposes, the Company and its subsidiaries are currently organized into Java and outside Java geographical operations. These geographical operations are the basis on which the Company and its subsidiaries report their primary segment information, as follows :

Java Outside Java Elimination Total

Revenue

External revenue 21,325,287 3,878,355 - 25,203,642Inter-segment revenue - - - -Total 21,325,287 3,878,355 - 25,203,642

Segment results 12,209,372 (3,283,043) 11,860,637 20,786,966Unallocated operating expenses (19,611,675)Income from operations 1,175,291

Unallocated other charges (1,611,099)Tax expense (415,316)Net loss (851,124)

Segment Assets 170,492,723 70,498,214 (121,953,090) 119,037,847Unallocated assets 137,124,382Total consolidated assets 256,162,229

Segment Liabilities 92,317,356 84,357,343 (171,575,258) 5,099,441Unallocated liabilities 111,925,448Total consolidated liabilities 117,024,889

2007


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Java Outside Java Elimination Total

Revenue

External revenue 18,693,165 3,539,831 - 22,232,996Inter-segment revenue - - - -Total 18,693,165 3,539,831 - 22,232,996

Segment results 8,290,874 (3,146,412) 12,079,222 17,223,684Unallocated operating expenses (17,115,959)Income from operations 107,725

Unallocated other charges 1,721,307Tax expense (669,381)Net income 1,159,651

Segment Assets 172,295,864 59,482,005 (114,934,181) 116,843,688Unallocated assets 111,429,555Total consolidated assets 228,273,243

Segment Liabilities 93,996,055 66,587,543 (157,457,356) 3,126,242Unallocated liabilities 84,132,890Total consolidated liabilities 87,259,132

2006

Business Segments The Company and its subsidiaries’ operations are mainly to provide electricity power supply. The Company and its subsidiaries’ operations which are not engaged in electricity represent 0.56% and 0.42% of total revenues in 2007 and 2006, respectively. Revenues based on business segments are as follows :

2007 2006

Electricity power supplyRevenue from sale of electricity by tariff category

Industry 6,777,314 6,610,599Residentials 6,691,883 5,905,742Business 3,508,833 3,259,186Public 1,142,821 1,062,532

Subtotal 18,120,851 16,838,059Government subsidy 6,775,461 5,146,212Customer connection fees 131,119 122,449Upgrading of electricity power and administration fees,

and transformer rental 34,655 34,662

Subtotal 25,062,086 22,141,382

Others 141,556 91,614Total 25,203,642 22,232,996


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53. COMMITMENTS AND CONTINGENCIES As of March 31, 2007, the Company and its subsidiaries have significant commitments and contingencies, as follows: a. The Company and its subsidiaries entered into fuel supply agreements, as follows:

i. Gas Agreement Unit of Agreed

Sector Suppliers number Duration measure quantity ***)

Tanjung Batu Pertamina - Medco Samarinda (TAC) 0059-4.PJ/061/DIRUT/2003 2003-2008 TBtu 31,035Tanjung Batu Pertamina - Semco Samarinda (TAC) 1307-1.PJ/040/DIR/2005 2006-2016 TBtu 79,026Gunung Belah - Tarakan Medco 0073-1.PJ/061/DIR/2002 2002-2012 TBtu 9,651ST Indralaya Medco 0073-2.PJ/061/DIR/2002 2002-2012 TBtu 56,182Borang - Palembang Medco 00145.PJ/060/DIR/2003 2004-2013 TBtu 67,048

2006-2013 TBtu 13,075Kaji - Palembang Medco 0068.PJ/DIR/060/2003 2003-2011 TBtu 25,280Belawan Pertamina 1331-3.3PJ/040/2005 2002-2011 BSCF 151,900Kramasan - Palembang Medco 0005-1.PJ/041/DIR/2006 2007-2013 TBtu 71,852Teluk Lembu Kalila (Bentu) 1257.PJ/040/DIR/2005 2006-2020 TBtu 149,036Gresik EMP Kangean 1331-1.PJ/040/DIR/2005 2008-2024 TBtu 368,700Gresik Pertamina - Kodeco

(TAC) 0059-2.PJ/06/DIR/2003 2002-2013 BBTU 311Gresik EMP Kangean 008.PJ-PJB-EMP/VI/2005 2005-2007 BBTU 12.99Sunyaragi Pertamina 43.A.PJ/061/IP/2004 2003-2008 BSCF 7,875Muara Karang and Tanjung Priok *) 652/BP00000/2003-50 2004-2017 BSCF 1,360.48Cilegon - Jawa Barat **) 2006-2018 TBtu 356,300

*) BP West Java Ltd, Itochu Oil Exploration Co. Ltd, MC Oil & Gas Java BY, Inpex Jawa Ltd, CNOOC

ONWJ Ltd and Paladin Resources (Sunda) Ltd.

**) CNOOC SES Ltd, Inpex Sumatra Ltd, KNOC Sumatra Ltd, MC Oil & Gas Sumatra BV,

Paladin Resources (Sunda) Ltd, Paladin UK (Southeast Sumatra) Ltd, Paladin Resources (Bahamas) Ltd.

***) In full amount

Gas purchase price at point of delivery ranges from US$ 1.15 to US$ 2.65 per MMBTu.

Payments of gas purchases are secured by stand-by letters of credit (SBLC). The Company has SBLC facility with maximum amount of US$ 39.9 million on every SBLC issuance from Bank Negara Indonesia. SBLC facility has a term of 13 years, due on December 31, 2016.

ii. Coal

Contract Quantity inSuppliers number metric ton *) Duration

PT Adaro Indonesia 055.PJ/061//1999 1,000,000 2006-2011PT Berau Coal 325.PJ/061/UBPSLA/2006 2,000,000 2006-2007PT Kideco Jaya Agung 346.PJ/061/UBPSLA/2006 1,500,000 2006-2007PT Tambang Batubara Bukit Asam 161.P/061/IP/2002 61,000,000 2003-2012

163-1.PJ/061/DIR/2004 960,000 2004-2013PT Jorong Barutama Graston 050.PJNP/9212/1997/M 300,000 2004-2009PT Daya Citra Mulia 045.PJ/061/2004 3,300,000 2006-2010Others Various 664,000 2006-2007

*) In full amount


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The stockpile price of coal purchases ranges from Rp 324,500 to Rp 351,700 per metric ton, which is adjusted against calorific value, ash content, sulphur, water, SFT and HGI. The stockpile of coal purchase price is still under negotiation.

iii. Fuel

The Company and Pertamina entered into a Fuel Buy and Sell Agreement No. 071.PJ/060/DIR/2001 dated October 8, 2001 which was valid until October 8, 2004. Pertamina agreed to sell and distribute solar oil, diesel oil and flame oil (fuel) based on the Company’s needs for operation of its power plants at the price determined by the Government. On July 20, 2005, the Company and Pertamina changed the terms of such agreement which is valid until December 31, 2005 or until a new Fuel Buy and Sell Agreement is signed, whichever is earlier. Pertamina in its letter dated January 9, 2006, agreed to continue supplying fuel in accordance with the needs of the Company and its subsidiaries at the commercial fuel price. Based on the mutual agreement dated April 13, 2007, the Company and Pertamina agreed to use the fuel price based on the agreement dated July 20, 2005 for the period of January 1 to April 30, 2007 and the fuel price of 109.5% of Mid Oil Platts Singapore (MOPS) plus value added tax for the period of May 1 to December 31, 2007. This agreement is valid until a new Fuel Buy and Sell Agreement is signed or not later than December 31, 2011 (Note 53).

iv. Geothermal Heat

The Company has a geothermal heat procurement agreement with Pertamina for Kamojang for 30 years until 2012, while the agreements for Gunung Salak and Darajat are for 30 years until 2030.

b. The Company entered into Power Purchase Agreement (PPA) and Energy Sales Contract (ESC) with big scale Independent Power Producers (IPP) prior to 1997. In 1999, the Company entered into renegotiation of PPA and ESC through Working Group on PLN Special Contract Renegotiation under the direction of a Presidential Team. Such renegotiation includes, among others, equalization in contract condition, reasonableness of price and disparity of selling price between IPP and the Company. In 2006, the Company and all of the IPP have agreed to include some amendments to the PPAs and ESCs.

As of March 31, 2007, the significant agreements between the Company and its subsidiaries with IPPs are as follows:

i. In Operations

Capacity AF 2)No. Companies Projects/Locations Fuels (MW) (%) Duration

1. PT Cikarang Listrindo Cikarang, West Java Gas 150 72 1996-20162. PT Energi Sengkang Sengkang, South 1997-1998-

Sulawesi Gas 200 85 2028/20313. Chevron Geothermal Salak Ltd. and Gunung Salak, West Java Geothermal 330 90 2002-2040

Dayabumi Salak Pratama Ltd.4. PT Makassar Power Pare-pare, South

Sulawesi MFO 60 80 1999-20165. PT Paiton Energy Paiton I, East Java Coal 1,230 85 1994-20406. PT Jawa Power Paiton II, East Java Coal 1,220 83 1995-20307. Pertamina, Chevron Drajat Ltd.

Texaco Drajat Ltd. and 2000- PT Drajat Geothermal Ind. Drajat, West Java Geothermal 140 95 2030/2040

8. Pertamina and Magma Wayang Windu, West 1998-1999- Nusantara Limited 3) Java Geothermal 110 90 2008/2029

9. PT Geo Dipa Energy Dieng, Central Java Geothermal 60 85 2004-204610. PT Asrigita Prasarana Palembang Timur,

South Sumatera Gas 150 85 2002-202211. PT Sumber Segara Primadaya Cilacap, Central Java Coal 600 80 2004-2036

12. PT Dalle Energy Batam Panaran, Batam Island Gas 55 80 2005-2016

13. PT Mitra Energi Batam Panaran, Batam Island Gas 55 84 2005-2016

14. PT Indo Matra Power Industrial Zone, Batam Island Gas 17 90 2005-2017

15. PT Metaepsi Pejebe Power Gunung Megang, South Generation Sumatera Gas 80 80 2005-2025

16. PT Pusaka Jaya Palu Power Palu, Central Sulawesi Coal 27 80 2007-2032Total 4,484


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ii. Not Yet in Operation (Development Stage) Capacity AF 2)

No. Companies Projects/Locations Fuels (MW) (%) Duration

1. PT Tenaga Listrik Amurang Amurang, North Sulawesi Coal 110 80 2003-2033

2. PT Tenaga Listrik Sibolga Sibolga, North Sumatera Coal 200 80 2003-2033

3. Pertamina and Bali

Energy Ltd. 5) Bedugul, Bali Geothermal 175 95 2004-2040

4. YPK PLN 6) Cibuni, West Java Geothermal 10 90 1998-2028

5. Pertamina 7) Kamojang, West Java Geothermal 60 90 2004-2034

6. PT Geo Dipa Energi 4) Patuha, West Java Geothermal 180 85 2004-2046

7. PT Bajradaya Sentranusa 8) Asahan I, North Sumatera Water 180 75 2010-2040

8. PT Dizamatra Powerindo Sibayak, North Sumatera Geothermal 10 90 1996-2030

9. PT Cahaya Fajar Kaltim East Kalimantan Coal 45 75 2009-2039

10. PT Metaepsi Pejebe Power Gunung Megang, South Gas 40 80 2007-2027

Generation (unit 2) Sumatera

11. PT Gorontalo Energi Gorontalo, Gorontalo Coal 12 80 2009-2033

12. PT Ketapang Arya Power Ketapang, West Kalimantan Coal 12 80 2009-2033

13. PT Belitung Arya Power Belitung, Bangka Belitung Coal 12 80 2009-2033

14. PT Tenaga Listrik Bintan Tanjung Pinang, Kep. Riau Coal 20 80 2009-2033

15. PT Tenaga Listrik Jayapura Jayapura, Papua Coal 20 80 2009-2033

16. PT Karya Putra Powerin Sampit, Central Kalimantan Coal 12 80 2009-2033

17. PT Mahajaya Arya Satya Tanah Grogot, East Coal 12 80 2009-2033

Kalimantan

18. PT Kassa Listrindo Lakatong, South Sulawesi Coal 90 80 2009-2033

19. PT Bukit Pembangkit Banjarsari, South Sumatera Coal 200 80 2010-2034

Innovative

20. PT Listrik Nusantara Karimun Tanjung Balai, Riau Coal 12 80 2010-2035

21. PT Sepoetih Daya Prima Lampung Tengah Coal 12 80 2010-2035

22. PT Kalinda Kita Jaya Kalianda Coal 12 90 2010-2035

23. PT Ranyza Energi Kuala Tanjung Coal 225 84 2010-2035

24. PT General Energy bali Celukan Bawang Coal 380 85 2010-2035

25. PT Banyuasin Power Energy Banyuasin Coal 125 80 2010-2035

26. PT Inpola Meka Elektrindo Parluasan, Sumut Mini Hydro 4.2 80 2010-2035

27. PT Mambruk Sarana Telun Berasap, Jambi Mini Hydro 6 80 2010-2035

28. PT Fajar Futura Energi Luwu Ranteballa, Sulsel Mini Hydro 2.4 80 2010-2035

29. PT Equator Manunggal Power Pontianak Coal 50 80 2010-2035

30. PT Bangka Manunggal Power Bangka Coal 21 80 2010-2035

31. PT Central Korporindo Tembilahan Coal 11 80 2010-2035

International

32. PT Central Korporindo Rengat Coal 11 80 2010-2035

International

33. PT Central Korporindo Pangkalan Bun Coal 11 80 2010-2035

International

Total 2,283

1) The agreements are effective from the date of signing and will last for about 19 to 30 years starting on the commercial operation date.

2) AF = Power supply factor which should be absorbed by the Company.

3) Since May 16, 2000, the Company together with Pertamina and Magma Nusantara Limited (Joint Operation - Wayang Windu Project) entered into certain interim agreement wherein they agreed to use interim purchase price tariff until the restructured ESC was signed. On November 21, 2006, amendment to ESC was signed.

4) Previously owned by Himpurna California Energy Limited and Patuha Power Limited. On May 2, 2001, the Government of the Republic of Indonesia took over the project and paid the insurance claim of Overseas Private Investment Corporation (OPIC) amounting to US$ 260 million. In 2002, Pertamina and the Company established PT Geo Dipa Energi to continue the project.

5) On February 19, 2004, amendment to ESC was signed.


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6) Previously owned by PT Yala Tekno Geothermal (YTG) and on August 7, 2003, the Presidential Team approved Yayasan Pendidikan dan Kesejahteraan PLN to acquire the project from YTG.

7) Previously owned by PT Latoka Trimas Bina Energi (LTBE) and on August 7, 2003, the Presidential Team approved Pertamina to acquire the project from LTBE. Amendment to ESC has been signed.

8) On January 8, 2004, amendment of PPA has been signed.

The electricity power price per kWh for gas, MFO and coal power plants were determined by certain formula as stated in the agreement which regulate, among others, capital cost recovery, fixed operation and maintenance cost payment, fuel expense and variable operation and maintenance cost payment. For geothermal heat power plant, the electricity power price ranges between US$ 0.04011 to US$ 0.070 per kWh.

Based on the agreements with certain IPPs, the Company may exercise its option to purchase all of the IPP’s rights, title and interest in the projects at any time during the contract period.

c. As of March 31, 2007, the Company and its subsidiaries have commitments with contractors and suppliers for property, plant and equipment procurement, denominated in several foreign currencies equivalent to Rp 6,615,519 million.

d. As of March 31, 2007, the Company has unused two-step loan facilities in several foreign currencies equivalent to Rp 20.1 trillion due on 2007 - 2014. The unused facility of Rp 5.4 trillion bears a provision charge at 0.20% - 0.75% per annum while the remaining facility of Rp 14.7 trillion does not have any provision charge.

e. On June 9, 2005, the Company has signed the Operation and Maintenance Agreement with

Consortium of Fortum Service OY and PT Medco Energy International Tbk for mobilization, operation and maintenance of the Tanjung Jati B project during the lease term (Note 27) with contract value amounting to Rp 2.8 trillion (including 10% VAT).

f. The Company and PJB faced a lawsuit claim amounting to Rp 162.5 billion and seizure of 88,900 acres of land in favor of the people of Sirnagalih Village (plaintiff), Manis Subdistrict, Purwakarta Regency Area for the land acquired from Perum Perhutani Unit III West Java (“Perhutani”) which was used for the development of water power plant (PLTA) Cirata, one of PJB’s power plant. The Company and PJB served as the second and the third defendants, respectively, while Perhutani and National Land Agency served as the first and the fourth defendant, respectively. On July 29, 1999, the Purwakarta District Court ruled in favor of the plaintiff and requested Perhutani to pay the compensation fee to the people of Sirnagalih Village. Perhutani objected to the decision and thus appealed to Bandung High Court.

In April 2000, the Bandung High Court decided to accept Perhutani’s appeal and to annul the decision of Purwakarta District Court and stated that the case has no legal basis. Subsequently, the plaintiff appealed to the higher court.

In July 2003, the Supreme Court of The Republic of Indonesia based on its decision No. 2671 K/Pdt/2001, upheld the appeal of the plaintiff and overruled the decision of Bandung High Court and the decision of Purwakarta District Court and ordered the High Court to examine and decide on the case. The High Court has overruled the decision of the Purwakarta District Court and dismissed the case. As of the date of the issuance of the consolidated financial statements, the case is under the civil review process.

g. The Company faced claims from Electricity Consumer Group of the Company amounting to Rp 110.4 billion for electricity shut-down in Nanggroe Aceh Darussalam. On August 25, 2003 and January 19, 2004, both the District Court and High Court of Nanggroe Aceh Darussalam have denied the claims. As of the date of the issuance of the consolidated financial statements, the case is still under appeal to the Supreme Court of the Republic of Indonesia.


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h. The Company faced claims from Electricity Consumer Group (plaintiff) amounting to Rp 40.8 billion for electricity shut-down in Bangka Belitung. The District Court of Bangka Belitung decided in favor of the plaintiff while the High Court has denied the claim. As of the date of the issuance of the consolidated financial statements, the case is still under appeal to the Supreme Court of the Republic of Indonesia.

i. On May 17, 2004, PJB terminated the contract of ”Non-OEM Re-engineered Hot Gas Part of Muara Tawar Project” with Columbia Turbo and Engineering Service Pte. Ltd., Singapore (Columbia). On December 15, 2004, both parties agreed not to use the International Arbitration in Singapore to settle the case. Furthermore, on July 15, 2005, PJB and Columbia agreed to continue the contract under the condition that PJB will agree to resolve the obstacle of the contract implementation until December 2005. Both sides also agreed that the case is temporarily in status quo and will be negotiated through amicable contract settlement. As of the date of the issuance of the consolidated financial statements, the contract negotiation is still in process.

j. The Company faced claims from PT Kereta Api Indonesia (plaintiff) amounting to Rp 120.5 billion in

relation to the land owned by the Company located at Martadinata Street, Jakarta. The District Court has denied the claims, while the High Court ruled in favor of the plaintiff. As of the date of the issuance of the consolidated financial statements, the case is still under appeal to the Supreme Court of the Republic of Indonesia.

k. The Company faced claims from Kilpatrick Green Pty, Ltd. Amounting to US$ 4,193,292 and Rp 1.5

billion on negligence of Java-Madura sea wire reparation contract. The High Court has denied such claims. The Supreme Court of the Republic of Indonesia on its decision dated June 22, 2006 has denied the appeal of the plaintiff.

l. The Company faced claims from PT Kurodona Gaugetama amounting to US$ 2,310,250 for the

violation of lease agreement. The District Court has denied such claims but the High Court of Banten ruled in favor of the Company. As of the date of the issuance of the consolidated financial statements, the case is still under appeal to the Supreme Court of the Republic of Indonesia.

m. On November 15, 2006, the Company faced claim from the Facultas Hukum Universitas

Muhammadiyah Sumatera Utara and Persaudaraan Advokat Konsumer amounting to Rp 250 billion as part of class action relating to damages caused by blackouts in Medan, North Sumatera. As of the date of the issuance of the consolidated financial statements, the case is in the District Court of Medan.

n. On January 10, 2007, PT Dalley Energy (plaintiff) has filed a lawsuit against the Company due to the

release of the plaintiff from the auction of PLTU I Banten 600-700 MW - Suralaya project. As of the date of the issuance of the consolidated financial statements, the case is under legal proceeding to the South Jakarta District Court.

o. The Company faced claims from PT Bintang Saudara amounting to Rp 61.1 billion related to the

cancellation of the Company’s Electricity Power Procurement Agreement. The District Court has denied such claims. As of the date of the issuance of the consolidated financial statements, the case is under appeal to the High Court.

p. The Company also faced claims for compensation of losses, which are immaterial in amount, at

several areas of the Company’s transmission/distribution facilities, disputes with the Company’s employees, and cases with customers and suppliers. Management believes that such claims is not material and will not significantly affect the Company’s operations.


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q. On February 19, 1999, there has been a damage on the sea wire at Madura Strait caused by Motor Vessel (MV) Kota Indah. The Company has filed a claim of US$ 5,699,995 and Rp 15,801 million against Advance Container Lines (Pte) Ltd., Pacific International Lines (Pte) Ltd., Shaukat Ali Akhtar, the Captain of MV. Kota Indah and The Britania Steam Ship Insurance Association Ltd (P & I Club). The Company won the case based on Decision of Supreme Court No. 1801 K/Pdt/2002 dated July 15, 2004 and the defendants on a parri-passu basis are forced to pay the compensation to the Company. The defendants have filed for a civil review and accordingly the Company has submitted a counter appeal for such review (in process of examination by the Supreme Court of the Republic of Indonesia). As of the date of the issuance of the consolidated financial statements, the Company is still in the process of executing the decision of the Supreme Court of the Republic of Indonesia.

54. SUBSEQUENT EVENTS a. Based on Presidential Decree No. 71 Year 2006 dated July 5, 2006, the Government mandates the

Company to build coal-fired electricity generating plants at 40 locations in Indonesia, which include 10 coal-fired electricity power plants (PLTU) with an aggregate capacity of 6,900 MW in Java - Bali and 30 coal-fired electricity power plants with an aggregate capacity of 1,852 MW outside Java - Bali. As of the date of the issuance of the consolidated financial statements, the Company has signed 5 Engineering Procurement and Construction (EPC) contracts as follows :

Commercial

Contract Operation

Location Capacity EPC Contractors US$ *) Rupiah dates Dates

PLTU 1 Banten 1 x 625 MW Consortium CNTIC (China 334,457,346 865,162 March 12, 2007 January 2010(Suralaya Baru) National Technical Import &

Export Corporation, China National Machinery Import & Export Corporation, Zhejiang Electric Power Design Institute and PT Rekayasa Industri)

PLTU 2 Jawa Timur 1 x 660 MW Consortium Harbin Power 389,206,489 706,630 March 12, 2007 January 2010(Paiton Baru) Engineering Co. Ltd

and PT Mitra SelarasHutama Energi

PLTU 2 Banten 2 x 315 MW Consortium Chengda 339,479,648 1,398,292 March 12, 2007 July 2009(Labuan) Engineering Corporation

of China dan PT Truba Jurong Engineering

PLTU 1 Jawa Barat 3 x 330 MW Joint Operation of Sinomach, 696,734,421 1,497,545 March 12, 2007 July 2009(Indramayu) CNEEC, and PT Penta Adi

Samudera

PLTU 1 Jawa Tengah 2 x 315 MW Consortium Zelan - 308,000,000 2,248,800 March 21, 2007 August 2010(Rembang) Priamanaya - Tronoh

*) In full amount

Contract amounts

The Company has paid down payment amounting to USD 203,284,629 and Rp 600,673 million accordance with the terms of the contracts.

b. On May 16, 2007, the Company has filed Registration Statement (Pernyataan Pendaftaran) for

Public Offering PLN IX Bond Year 2007 with an aggregate amount of Rp 2,700,000 million, which consists of Series A bonds with a term of 10 years and Series B bonds with a term of 15 years, and Sukuk Ijarah PLN II Bond Year 2007 of Rp 300,000 million with a term of 10 years (Public Offering of Bond) to Capital Market Supervisory Agency (Bapepam) and Financial Institutions. As of the date of consolidated financial statements, such obligation offering is still in process.


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c. On May 16, 2007, the Company and Pertamina entered into a new Fuel Buy and Sell Agreement , which include the following terms, among others: (i) to use monthly fuel price determined by Pertamina for the period of January 1 to April 30, 2007 and, the fuel price of 109.5% of Mid Oil Platts Singapore (MOPS) plus value added tax for the period of May 1 to December 31, 2007; (ii) the fuel price subsequent to December 31, 2007 will be determined by both parties every year; (iii) the terms of payment and the related penalty on late payment; (iv) effective on May 1, 2007, the unpaid balance of payable for the purchases of fuel until April 30, 2007 will bear an interest with a rate per annum of Certificate of Bank Indonesia plus 1.3%, until settled by issuance of PLN Bonds, which is no later than August 31, 2007; (v) the maximum payable to Pertamina, include bonds which will issued amounting to Rp 18 trillion; (vi) this agreement is valid for 5 years since January 1, 2007 until December 31, 2011.

d. On July 19, 2003, IP, a subsidiary, entered into a Gas Sales Agreement with Santos (Sampang) Pty

Ltd, Coastal Indonesia Sampang Ltd, and Cue Sampang Pty Ltd, collectively “the Contractors”. This agreement states, among others, that the Contractors will supply gas to IP under a total potential production of 90.1 TBtu to 90.9 TBtu until 2012. The effective date of this agreement is subject to certain conditions, which includes the approval of the Credit Facility Agreement by the Contractors. In relation to this condition, IP and the Contractors entered into the first addendum to the Gas Sales Agreement on May 24, 2007. This addendum pertains to the issuance of Letter of Credit amounting to US$ 55,000,000 on first addendum date for the Letter of Credit period commencing on the date of its issuance and ending on twelve months after “Start Date”, which is the date when IP has been notified that the facilities for the supply of gas are ready for production, processing and delivery of gas, or thirty six months after May 24, 2007, whichever is earlier. After the Start Date, the amount of the Letter of Credit can be reduced in value by the monthly payment of IP, provided that, the amount of the Letter of Credit will not be lower than US$ 20,000,000. In relation to the addendum, IP entered into a Credit Facility Agreement amounting to US$ 55,000,000 with the issuing banks, namely Citibank N.A. Jakarta, PT Bank Internasional Indonesia and Standard Chartered Bank, Jakarta on May 24, 2007. On June 4, 2007, IP has paid US$ 20,000,0000 as cash collateral account. This credit facility is governed by certain covenants, including, among others, the disposal of assets, financial indebtedness, mergers and acquisitions and payment of dividends. On June 11, 2007, IP sent a letter of request to the issuing banks for the amendment of the Credit Facility Agreement regarding the covenant on the limitation on disposal of assets and payment of dividends. As of the date of the consolidated financial statements, the request is still in process.

55. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements of the Company and its subsidiaries for the three-month periods ended March 31, 2007 and 2006 have been approved by the directors for issue on June 12, 2007.

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1q 2007 financial statements

Documents

nanggroe aceh

eddie widiono

ali herman

pt bajradaya

dayabumi salak

consolidated

consolidated

repaired spare