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 CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2007 and 2006 (unaudited) and for the three-month periods then ended Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements 2 4 5 6 8 1

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 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 Construction in progress Long-term investments Deferred tax assets Assets not used in operations Receivables from related parties Restricted cash in banks and time deposits Other noncurrent assets Total Noncurrent Assets CURRENT ASSETS Cash and cash equivalents Short-term investments Trade accounts receivable - net of allowance for doubtful accounts of Rp 321,567 million in 2007 and Rp 348,034 million in 2006 Receivables on electricity subsidy Other receivables Inventories - net of allowance for decline in value of Rp 46,402 million in 2007 and Rp 36,265 million in 2006 Prepaid taxes Prepaid expenses and advances Total Current Assets TOTAL ASSETS 2007 2006

2e,4,27,28 2f,5 2h,6 2w,47 2g,7 8,50 9,27 2i,2j,2u,10,49

198,642,265 11,282,691 599,089 57,939 974,548 1,230,403 4,544,493 1,331,000 218,662,428

175,764,209 19,792,767 402,444 8,435 2,187,631 1,050,547 1,585,765 2,217,670 203,009,468

2k,11 2h,12 2l,13,29 14,38 15 2m,16 17,47 2j,2u,18,49

16,925,944 1,061,980 2,594,928 11,162,298 208,347 4,650,302 193,335 702,667 37,499,801 256,162,229

8,527,102 901,752 2,043,414 8,806,526 191,294 3,727,419 365,888 700,380 25,263,775 228,273,243

See accompanying notes to consolidated financial statements which are an integral part of the consolidated financial statements.

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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) - Continued Notes LIABILITIES AND EQUITY EQUITY Capital stock - par value of Rp 1 million per share Authorized - 63,000,000 shares Subscribed and fully paid - 46,107,154 shares Additional paid-in capital Revaluation increment on property, plant and equipment Difference due to changes in equity of subsidiaries Retained earnings (deficit) Appropriated Unappropriated Total Equity NONCURRENT LIABILITIES Deferred revenue Customers' security deposits Deferred tax liabilities Long-term liabilities - net of current maturities Two-step loans Government loans Lease liability Bank loans Bonds payable Electricity purchase payable Employee benefit obligations Other payables Payable to related parties Project cost payable Total Noncurrent Liabilities CURRENT LIABILITIES Trade accounts payable Related parties Third parties Taxes payable Accrued expenses Current maturities of long-term liabilities Two-step loans Government loans Lease liability Bank loans Bonds payable Electricity purchase payable Employee benefit obligations Other payables Total Current Liabilities TOTAL EQUITY AND LIABILITIES 2007 2006

19,26 20,26 2e,4,21 2b,22

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

46,107,154 24,064,398 77,640,558 59,915,695 1,894,149 (68,607,844) 141,014,110 5,969,338 3,874,492 5,847,605 12,826,451 3,989,200 2,091,279 6,820,115 11,028,989 707,857 91,110 370,666 53,617,102

2p,23 24 2w,47 2o,25 26 2e,27 28 2q,29 2t,30,33,53 2u,49 34,50 31 2o,32

6,357,826 4,172,296 7,571,971 12,705,538 3,672,408 13,541,363 23,504 12,877,074 6,714,961 11,952,436 438,397 133,167 1,116,490 81,277,431

33,50,53 33,53 2w,35,45,47 36 2o,25 26 2e,27 28 2q,29 2t,30,33,53 2u,49 34

213,637 25,880,861 1,195,717 1,802,196 1,828,112 316,793 775,084 13,982 600,000 376,322 1,258,519 1,486,236 35,747,459 256,162,229

68,416 24,798,490 3,138,008 847,584 2,011,401 316,793 4,267 140,909 1,145,016 1,171,147 33,642,031 228,273,243

See accompanying notes to consolidated financial statements which are an integral part of the consolidated financial statements. -3-

PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED) (Figures in tables stated in millions of Rupiah) Notes REVENUES Sale of electricity Customer connection fees Government subsidy Others Total Revenues OPERATING EXPENSES Fuel and lubricants Purchased electricity Maintenance Personnel Depreciation Others Total Operating Expenses INCOME FROM OPERATIONS OTHER INCOME (CHARGES) Interest income Interest expense and financing charges Gain (loss) on foreign exchange - net Others - net Other Income (Charges) - Net INCOME (LOSS) BEFORE TAX TAX EXPENSE NET INCOME (LOSS) BASIC EARNINGS (LOSS) PER SHARE (In full Rupiah amount) 2x,48 2w,47 8,9,11,12 45 2d,51 46 40 41,50 42 43,49 2e,4 44 2r,37 2p,23 2s,38 39 2007 18,120,851 131,119 6,775,461 176,211 25,203,642 13,714,596 4,088,627 1,122,100 1,585,489 2,656,369 861,170 24,028,351 1,175,291 175,713 (1,181,250) (570,108) (35,454) (1,611,099) (435,808) (415,316) (851,124) 2006 16,838,059 122,449 5,146,212 126,276 22,232,996 12,876,430 3,691,180 982,388 1,355,090 2,504,655 715,528 22,125,271 107,725 112,581 (823,266) 2,367,039 (42,772) 1,613,582 1,721,307 (669,381) 1,051,926

(18,460)

22,815

See accompanying notes to consolidated financial statements which are an integral part of the consolidated financial statements.

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PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED) (Figures in tables stated in millions of Rupiah) Revaluation increment on property, plant and equipment 77,640,558 77,640,558 77,640,558 77,640,558

Note Balance as of January 1, 2006 Additions during the period Net income for the period Balance as of March 31, 2006 Balance as of January 1, 2007 Additions during the period Net loss for the period Balance as of March 31, 2007

Paid-up capital stock 46,107,154 46,107,154 46,107,154 46,107,154

Additional paid-in capital 23,855,892 208,506 24,064,398 25,868,016 150,517 26,018,533

Difference due to changes in equity of subsidiaries 59,915,695 59,915,695 59,915,695 59,915,695

Retained earnings (deficit) Appropriated Unappropriated 1,894,149 1,894,149 1,894,149 1,894,149 (69,659,770) 1,051,926 (68,607,844) (71,587,626) (851,124) (72,438,750)

Total equity 139,753,678 208,506 1,051,926 141,014,110 139,837,946 150,517 (851,124) 139,137,339

20

20

See accompanying notes to consolidated financial statements which are an integral part of the consolidated financial statements.

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PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED) (Figures in tables stated in millions of Rupiah) 2007 CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers Cash paid to suppliers and employees Cash paid for other operations Cash generated from operations Government subsidy received Interest expense paid Interest received Income tax paid Payment of taxes on revaluation increment of property, plant and equipment Net Cash Provided by Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment, construction in progress and assets not used in operations Decrease in receivables from related parties Acquisition of long-term investments Payment of payable on investment in shares of stock Proceeds from sale of property, plant and equipment Proceeds from sale of long-term investments Increase in short-term investments Net Cash Used in Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES Payment of two-step loans Payment of Government loans Proceeds from bank loans Payment of bank loans Payment of electricity purchase payable Payment of payable on acquisition of property, plant and equipment Payment of notes payable Net Cash Used in Financing Activities NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD Increase in restricted cash in bank CASH AND CASH EQUIVALENTS AT END OF PERIOD 18,556,132 (12,941,810) (79,695) 5,534,627 2,874,372 (660,367) 149,783 (883,107) 7,015,308 2006 17,443,830 (9,677,197) (246,730) 7,519,903 (542,693) 105,337 (546,574) (300,000) 6,235,973

(334,944) (44,316) (3,750) (18,600) 11,084 1,892 (79,615) (468,249) (634,787) (158,396) 9,100 (7,992) (398,447) (30,016) (1,220,538) 5,326,521 12,968,420 (1,368,997) 16,925,944

(886,658) (5,847) (45,741) (5,750) 695 (471,906) (1,415,207) (788,624) (158,397) 2,236 (69,686) (22,884) (190,000) (1,227,355) 3,593,411 5,361,749 (428,058) 8,527,102

See accompanying notes to consolidated financial statements which are an integral part of the consolidated financial statements.

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PERUSAHAAN PERSEROAN (PERSERO) PT PERUSAHAAN LISTRIK NEGARA AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED) (Figures in tables stated in millions of Rupiah) - Continued 2007 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 Government equity participation Capitalization of borrowing costs Capitalization of depreciation expense Other payables Reclassification of short-term investments to restricted time deposits Conversion of receivables from related parties into investment in shares of stock 2006

108,927 150,517 30,023 2,666 46,116 -

115,068 208,506 49,933 2,742 21,380 983,000 160,000

See accompanying notes to consolidated financial statements which are an integral part of the consolidated financial statements.

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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 Companys 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 Companys 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 Companys 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.01.04TH.2007 dated March 9, 2007. In accordance with article 3 of the Companys 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 Companys 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. -8-

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 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 Companys management consisted of the following:
March 31, 2007 President Commissioner Commissioners Independent Commissioners : : : Alhilal Hamdi Isnuwardianto Komara Djaja Bambang Permadi Soemantri Brodjonegoro Lutfi Hamid Eddie Widiono Suwondho Ali Herman Ibrahim Sunggu Anwar Aritonang Herman Darnel F. Parno Isworo Djuanda Nugraha Ibrahim Lutfi Hamid Bambang PS Brodjonegoro Maman Suparman Erman Jaya Kusuma Elok Tresnaningsih Lalu Rusmiady March 31, 2006 Alhilal Hamdi Isnuwardianto Komara Djaja Bambang Permadi Soemantri Brodjonegoro Lutfi Hamid Eddie Widiono Suwondho Ali Herman Ibrahim Sunggu Anwar Aritonang Herman Darnel F. Parno Isworo Djuanda Nugraha Ibrahim Bambang PS Brodjonegoro Komara Djaja Lalu Rusmiady Setio Anggoro Dewo Devy S. Nazahar -

President Director Director of Generation and Primary Energy Director of Commerce and Customer Services Director of Transmision and Distribution Director of Finance Director of Human Resources and Organization Audit Committee Chairman Members

: : : : : : : :

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 Companys 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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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 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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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 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 Companys 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 Installations and power plant Transmission equipment Distribution equipment General equipment Motor vehicles Spare parts Telecommunications and data processing equipment 10 47 13 30 37 15 37 48 35 10 25 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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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 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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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 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 straightline 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. - 13 -

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 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 Companys 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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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 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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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 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 Business Power generation Cogeneration, energy distribution, energy service and management Coal trading Power generation Power generation Service Electricity supplier Communications provider Engineering, procurement and construction Electricity supplier Electricity and engineering Finance Finance Percentage of Ownership 2007 2006 100.0 99.9 100.0 99.9 Commercial Operations 1995 1999 Total assets before elimination **) 2007 2006 59,186 64 61,792 73

Subsidiaries PT Indonesia Power (IP) and and its subsidiaries PT Cogindo Dayabersama (CDB) *)

Domicile Jakarta Jakarta

PT Artha Daya Coalindo (ADC) *) PT Indo Pusaka Berau (IPB) ***) PT Pembangkitan Jawa Bali (PJB) and its subsidiary PT PJB Service (PJBS) *) PT Pelayanan Listrik Nasional Batam (PLN Batam) PT Indonesia Comnets Plus (ICON) PT Prima Layanan Nasional Enjiniring (PLNE) PT Pelayanan Listrik Nasional Tarakan (PLN Tarakan) PT Rekadaya Elektrika (RDE) *) Majapahit Holding B.V. (MH) and its subsidiary Majapahit Finance B.V. (MF) *)

Jakarta Berau Surabaya Surabaya Batam Jakarta Jakarta Tarakan Jakarta Netherlands Netherlands

60.0 50.0 100.0 95.0 100.0 100.0 99.3 100.0 68.1 100.0 100.0

60.0 50.0 100.0 95.0 100.0 100.0 99.3 100.0 68.1 -

1999 2005 1995 2001 2000 2000 2003 2004 2004 2006 2006

47 148 41,678 19 1,572 415 21 221 38 9,340 9,162 -

39 139 41,400 18 1,399 242 26 195 29

*) 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.

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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) - Continued

4.

PROPERTY, PLANT AND EQUIPMENT

January 1, 2007 Cost or revalued amount Direct acquisitions Land Buildings, reservoir and infrastructure Installations and power plant Transmission equipment Distribution equipment General equipment Motor vehicles Spare parts Telecommunication and data processing equipment Subtotal Leased assets Land Installations and power plant Subtotal Total Accumulated depreciation Direct acquisitions Buildings, reservoir and infrastructure Installations and power plant Transmission equipment Distribution equipment General equipment Motor vehicles Spare parts Telecommunication and data processing equipment Subtotal Leased assets Installations and power plant Subtotal Total Net Book Value March 31, 2007

Additions

Deductions

7,571,799 27,594,012 91,490,256 48,855,340 60,190,299 2,970,285 521,041 422,316 2,254,694 241,870,042 58,591 15,767,182 15,825,773 257,695,815

1,265 29,733 155,657 420,271 361,004 35,073 1,204 8,832 39,717 1,052,756 1,052,756

2,242 2,134 9,390 14,637 11,329 972 15,768 10,667 2,727 69,866 69,866

7,570,822 27,621,611 91,636,523 49,260,974 60,539,974 3,004,386 506,477 420,481 2,291,684 242,852,932 58,591 15,767,182 15,825,773 258,678,705

4,760,808 25,132,752 7,718,217 15,991,070 1,886,955 383,448 137,694 1,179,874 57,190,818 121,741 121,741 57,312,559 200,383,256

220,853 1,228,013 433,409 587,178 83,486 17,757 5,724 45,352 2,621,772 145,992 145,992 2,767,764

1,055 7,710 3,483 10,062 854 15,864 2,821 2,034 43,883 43,883

4,980,606 26,353,055 8,148,143 16,568,186 1,969,587 385,341 140,597 1,223,192 59,768,707 267,733 267,733 60,036,440 198,642,265

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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) - Continued
January 1, 2006 Cost or revalued amount Direct acquisitions Land Buildings, reservoir and infrastructure Installations and power plant Transmission equipment Distribution equipment General equipment Motor vehicles Spare parts Telecommunication and data processing equipment Total Accumulated depreciation Direct acquisitions Buildings, reservoir and infrastructure Installations and power plant Transmission equipment Distribution equipment General equipment Motor vehicles Spare parts Telecommunication and data processing equipment Total Net Book Value March 31, 2006

Additions

Deductions

7,364,101 24,025,871 87,178,629 43,623,767 57,707,691 2,496,087 514,116 411,497 1,358,685 224,680,444

14,706 29,584 152,054 179,831 463,824 44,351 6,309 3,270 32,641 926,570

3,142 1,533 1,522 9,570 31,495 1,575 2,308 5,453 1,168 57,766

7,375,665 24,053,922 87,329,161 43,794,028 58,140,020 2,538,863 518,117 409,314 1,390,158 225,549,248

3,880,372 20,559,691 6,364,295 13,728,639 1,576,904 349,789 125,259 704,144 47,289,093 177,391,351

193,528 1,236,761 406,809 565,696 72,173 13,781 4,893 24,998 2,518,639

637 1,043 50 14,368 4,024 919 1,042 610 22,693

4,073,263 21,795,409 6,771,054 14,279,967 1,645,053 362,651 129,110 728,532 49,785,039 175,764,209

Depreciation expense was allocated to the following :

2007 Operating expenses Construction in progress Total 2,656,369 2,666 2,659,035 2006 2,504,655 2,742 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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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 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/SAUAPP/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 amount before revaluation Cost or revalued amount Land Building, reservoir and infrastructure Installations and power plant Transmission equipment Distribution equipment General equipment Motor vehicles Spare parts Telecommunication and data processing equipment Total Accumulated depreciation Building, reservoir and infrastructure Installations and power plant Transmission equipment Distribution equipment General equipment Motor vehicles Spare parts Telecommunication and data processing equipment Total Net Book Value 654,139 5,524,597 9,593,766 12,704,598 15,263,873 1,290,599 177,651 187,461 766,311 46,162,995 1,018,065 2,698,075 2,593,448 4,525,564 1,056,149 125,347 40,372 384,645 12,441,665 33,721,330 The Company Revaluation increment 2,161,512 1,609,018 5,811,685 21,391,505 34,812,000 (373,301) 156,975 23,735 (77,068) 65,516,061 (1,018,065) (2,698,075) (2,593,448) (4,525,564) (1,056,149) (125,347) (40,372) (384,645) (12,441,665) 77,957,726 Total carrying amount after revaluation 2,815,651 7,133,615 15,405,451 34,096,103 50,075,873 917,298 334,626 211,196 689,243 111,679,056 111,679,056

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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) - Continued
Total carrying amount before revaluation Cost or revalued amount Land Building, reservoir and infrastructure Installations and power plant Transmission equipment Distribution equipment General equipment Motor vehicles Spare parts Telecommunication and data processing equipment Total Accumulated depreciation Building, reservoir and infrastructure Installations and power plant Transmission equipment Distribution equipment General equipment Motor vehicles Spare parts Telecommunication and data processing equipment Total Net Book Value Total 323,455 4,444,493 19,134,034 162,109 294,875 580,938 53,483 4,665 38,053 25,036,105 1,011,517 4,140,059 9,831 14,693 473,679 48,956 530 9,838 5,709,103 19,327,002 53,048,331 Its subsidiaries Revaluation increment 3,800,671 10,711,679 45,545,083 17,364 278,295 (126,243) 11,846 2,658 (3,822) 60,237,531 (1,011,517) (4,140,059) (9,831) (14,693) (473,679) (48,956) (530) (9,838) (5,709,103) 65,946,634 143,904,360 Total carrying amount after revaluation 4,124,126 15,156,172 64,679,117 179,473 573,170 454,695 65,329 7,323 34,231 85,273,636 85,273,636 196,952,691

The revaluation increment on the Companys 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 Companys 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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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 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 Transmission Distribution Equipment Total 5,190,579 4,956,222 1,116,540 19,350 11,282,691 10,059,847 8,530,799 1,148,582 53,539 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:
Domicile
Direct ownership PT Geo Dipa Energi PT Unelec Indonesia

Nature of business Electricity supplier Electrical supports Coal mining and trading Electricity supplier Electricity supplier Electricity supplier Electricity supplier Electricity supplier Electricity supplier Electricity Electricity Electricity Electricity Electricity Electricity Electricity Electricity supplier supplier supplier supplier supplier supplier supplier supplier

Commercial operations 2002 1988 2002 2004 2006 2006 *) *) 2007 *) 2007 2007 *) *) *) *) *) *) **) *) *)

Percentage of ownership 2007 2006 33.00 32.35 25.00 30.00 49.00 20.00 26.02 35.00 19.00 20.00 15.00 7.50 15.00 15.00 20.00 10.00 10.00 55.00 49.00 80.00 51.00 33.00 32.35 25.00 30.00 49.00 26.02 35.00 19.00 15.00 7.50 10.00 55.00 49.00 80.00 51.00

Bandung Jakarta Banjarmasin Batam Cilacap Batam Asahan Jakarta Jakarta Palem bang Palem bang Palem bang
South Sum atera South Sum atera

Indirect ownership PT Daya Citra Mulia PT Mitra Energy Batam PT Sum ber Segara Primadaya PT Dalle Energy Batam PT Bajradaya Sentranusa PT Indo Muba Power PT Metaepsi Pejebe Power Generation PT Bukit Pembangkit Inovatif PT Pura Daya Prim a PT Elnusa Prima Elektrika PT Multidaya Prima Elektrindo PT Perm ata Prima Elektrindo PT Tenaga Listrik Jayapura PT Tenaga Listrik Bintan PT TJK Power Consortium s CBE consortium KSPM consortium IP-NTP consortium Indo Kupang Elektrindo Power consortium *) Development stage **) Under liquidation

Jayapura Pulau Bintan Batam Batam Saguling Bandung Kupang

Electricity supplier Ram ie plantation Electricity supplier Electricity supplier

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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) - Continued Changes in long-term investments are as follows :
Carrying amount January 1, 2007 PT Geo Dipa Energi PT Unelec Indonesia PT Daya Citra Mulia PT Mitra Energy Batam PT Sumber Segara Primadaya PT Dalle Energy Batam PT Bajradaya Sentranusa PT Indo Muba Power PT Metaepsi Pejebe Power Generation PT Multidaya Prima Elektrindo PT Tenaga Listrik Jayapura PT Tenaga Listrik Bintan PT TJK Power PT Bukit Pembangkit Inovatif Other companies Consortiums CBE consortium Other consortium Total 68,532 19,494 2,752 33,708 239,242 18,600 176,575 1,886 17,670 1,500 2,000 1,000 1,100 502 368 5,375 1,153 591,457 2007 Equity in net income (loss) of associates Additions for the current (deductions) year 3,750 (1,892) 1,858 (3,196) 2,666 189 1,093 5,777 (539) (216) 5,774

Carrying amount March 31, 2007 65,336 22,160 2,941 34,801 245,019 18,061 176,359 1,886 17,670 1,500 2,000 1,000 1,100 4,252 368 3,483 1,153 599,089

Carrying amount January 1, 2006 PT Geo Dipa Energi PT Unelec Indonesia PT Daya Citra Mulia PT Mitra Energy Batam PT Sumber Segara Primadaya PT Bajradaya Sentranusa PT Indo Muba Power PT Metaepsi Pejebe Power Generation PT TJK Power Other companies Consortiums CBE consortium Other consortiums Total 103,745 13,902 2,470 29,338 183,713 17,437 1,886 190 323 8,055 1,153 362,212

2006 Equity in net income (loss) of associates Additions for the current (deductions) year 27,261 17,480 1,000 45,741 (8,803) 2,228 189 1,093 (216) (5,509)

Carrying amount March 31, 2006 94,942 16,130 2,659 30,431 210,974 17,221 1,886 17,670 1,000 323 8,055 1,153 402,444

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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) - Continued 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 Batams 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 BDSNs 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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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 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 Assets for relocation, disposal and repairs At cost Property, plant and equipment to be relocated Property, plant and equipment to be disposed of Property, plant and equipment to be repaired Spare parts to be disposed of Construction in progress to be disposed of Total Accumulated depreciation or decline in value Property, plant and equipment to be relocated Property, plant and equipment to be disposed of Property, plant and equipment to be repaired Spare parts to be disposed of Construction in progress to be disposed of Total Carrying amount Assets not yet used in operations Total 2006

652,182 1,625,788 282,452 175,937 16,831 2,753,190 248,015 1,625,788 102,117 175,937 16,830 2,168,687 584,503 390,045 974,548

681,566 1,395,164 241,557 162,089 15,652 2,496,028 106,795 1,395,164 103,071 162,089 15,652 1,782,771 713,257 1,474,374 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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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 8. RECEIVABLES FROM RELATED PARTIES
2007 PT Sumber Segara Primadaya (US$ 57,307,898 in 2007 and US$ 53,359,875 in 2006) PT TJK Power PT Tenaga Listrik Jayapura (US$ 1,158,271) PT Tenaga Listrik Bintan (US$ 1,269,135) PT Dalle Energy Batam PT Bajradaya Sentranusa PT Mitra Energy Batam Officers Total 522,533 18,614 10,561 11,571 14,870 5,035 2,857 644,362 1,230,403 2006 484,241 5,035 561,271 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 PJBs 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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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 9. RESTRICTED CASH IN BANKS AND TIME DEPOSITS
2007 Restricted cash in banks Sumitomo 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) Restricted time deposits Bank Negara Indonesia - (US$ 100,000,000) Others Total 2006

3,624,727 911,800 7,966 4,544,493

676,765 907,500 1,500 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 Primadayas (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 Deferred charges - net Landrights Software Total Prepaid expenses Pension (Note 49) Building and land rental Others Total Advances PT Central Java Power Projects Total Total 30,485 577,058 607,543 8,545 10,132 106,095 124,772 80 598,605 598,685 1,331,000 2006 33,222 467,980 501,202 12,066 12,192 107,825 132,083 797,518 786,867 1,584,385 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 Companys VAT tax payable in accordance with handover of leased assets.

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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) - Continued 11. CASH AND CASH EQUIVALENTS
2007 Cash on hand Cash in banks Bank Mandiri Rupiah US$ EUR JPY Bank Negara Indonesia Rupiah US$ EUR CHF Bank Rakyat Indonesia Rupiah US$ JPY EUR Bank Bukopin Rupiah US$ Others (each below 5% of total) Rupiah US$ JPY EUR SGD Total cash on hand and in banks Cash equivalents - time deposits Bank Negara Indonesia Rupiah US$ Bank Bukopin Rupiah US$ Bank Rakyat Indonesia Rupiah US$ Bank Mandiri Rupiah US$ Bank Century (CIC) - US$ Others (each below 5% of total) Total time deposits Total Cash and Cash Equivalents Interest rate per annum on time deposits Rupiah US$ 45,097 923,080 994,053 543 456 1,526,994 615,728 257 3,583 2,091,668 1,395,373 1,847 23,759 1,571,111 952,370 720,159 55,006 1,299 180 3 10,922,566 2006 54,016 1,355,885 414,260 9,406 2,717,455 401,936 5,483 3,241 1,034,138 124,789 24,876 21,976 1,387,409 706,389 142,688 121 8,404,068

521,598 2,735,400 233,500 911,800 20,000 911,800 176,661 227,950 227,950 36,719 6,003,378 16,925,944

22,193 6,000 28,240 31,601 35,000 123,034 8,527,102

6% - 14% 5% - 13.6% 3.75% - 4.84% 3.75% - 4.25%

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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) - Continued Details of cash and cash equivalents in foreign currencies are as follows :
Original currency *) US$ JPY EUR Others **) Total 2007 Rp equivalent 9,027,430 3,602 24,739 3,586 9,059,357 Original currency *) 2006 Rp equivalent 1,083,673 34,282 27,580 3,241 1,148,776

990,066,969 46,430,048 2,035,371 393,216

119,413,094 445,341,761 2,531,997 357,149

*) **)

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 Time deposits Bank Negara Indonesia Rupiah US$ Bank Mandiri Rupiah US$ Bank Rakyat Indonesia Bank Bukopin Others (each below 5% of total) Rupiah US$ Total Other investments Total short-term investments Interest rate per annum on time deposits Rupiah US$ 2006

225,000 45,590 117,147 324,000 305,000 41,500 1,824 1,060,061 1,919 1,061,980

324,010 18,150 216,524 8,168 144,760 155,000 32,150 1,815 900,577 1,175 901,752

7.75% - 11.59% 5.75% - 8.15% 3.70% - 4.75% 0.65% - 2.5%

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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) - Continued As of March 31, 2007, time deposits, which were used as collateral, are as follows :
Placement Bank Negara Indonesia Bank Mandiri Bank Rakyat Indonesia Bank Bukopin Total Total 80,000 60 10,000 4,000 5,000 99,060 Used as collateral for : Opening of letter of credit to purchase maintenance material by PJB Bank guarantee facility, PLTU Project Labuan Working capital loan of ADC Bank guarantee facility, and PLTU Jayapura - Lot II-1 Working capital loan of ADC

13. TRADE ACCOUNTS RECEIVABLE

2007 a. By Debtor Public Government State-owned companies Indonesian Armed Forces Total Allowance for doubtful accounts Net b. By Age Category 1 to 90 days 91 to 360 days More than 360 days Total Allowance for doubtful accounts Net Changes in the allowance for doubtful accounts Beginning balance Additions Write-off Ending balance 1,477,731 966,435 472,329 2,916,495 (321,567) 2,594,928 (314,973) (6,959) 365 (321,567) 1,044,749 914,614 432,085 2,391,448 (348,034) 2,043,414 (341,031) (32,550) 25,547 (348,034) 2,106,978 307,740 37,250 464,527 2,916,495 (321,567) 2,594,928 1,657,451 289,900 34,974 409,123 2,391,448 (348,034) 2,043,414 2006

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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) - Continued 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 Budget years (Note 38) 2005 2006 2007 Total 852,697 10,309,601 11,162,298 2006 3,660,314 5,146,212 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 Companys 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 Companys 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 Contractors Interest from accounts receivable Others Total 54,195 50,715 103,437 208,347 2006 123,966 10,951 56,377 191,294

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

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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 16. INVENTORIES
2007 Fuel and lubricants Transformers Switchgear and networking Wire Meter recording device and control equipment General supplies Total Allowance for the decline in value Net Changes in allowance for the decline in value are as follows: Beginning balance Additions Ending balance 3,514,559 45,560 71,591 26,872 84,090 954,032 4,696,704 (46,402) 4,650,302 2006 2,878,554 22,642 39,067 21,754 81,366 720,301 3,763,684 (36,265) 3,727,419

(44,084) (2,318) (46,402)

(30,017) (6,248) (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 Overpayment of corporate income tax (Note 47) The Company 2007 2006 2005 2004 Subsidiaries 2007 2006 2005 2004 2003 2002 Income tax article 15 Value added tax Payment for tax assessment letters for underpayment and tax collection notice Total 2006

377 1,812 1,751 1,278 3,545 20,564 16,561 11,278 432 8,143 127,594 193,335

164 2,588 823

7,175 20,710 18,277 15,948 11,278 51 3,366 285,508 365,888

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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) - Continued 18. PREPAID EXPENSES AND ADVANCES
2007 Prepaid expenses Salaries and allowances Pension (Note 49) Insurance Rent Others Total Advances Purchase Others Total Total 232,305 169,132 21,717 16,391 37,035 476,580 198,074 28,013 226,087 702,667 2006 204,312 230,504 42,985 19,780 53,260 550,841 124,851 24,688 149,539 700,380

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 stockholders 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 Companys 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 Companys 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 Companys shares of stock are wholly owned by the Government of the Republic of Indonesia.

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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) - Continued 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 Project aid DIP (Daftar Isian Proyek - List of Project Fund) Regional Government participation and others Excess amount of the overdue interest and penalty over the two-step loans converted into Government Equity Participation (Note 26) Total 16,466,601 9,261,902 290,029 1 26,018,533 2006 15,623,695 8,240,300 200,402 1 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 : 2007 and 2006
Difference between the carrying amount and revalued amount of property, plant and equipment (Note 4) Final income tax on revaluation increment on property, plant and equipment Deferred tax effect Deferred gain on transfer of property, plant and equipment Total 77,957,726 (3,678,787) 2,810,162 551,457 77,640,558

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

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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) - Continued

22. DIFFERENCE DUE TO CHANGES IN EQUITY OF SUBSIDIARIES This account represents the Companys interest on the changes in equity of subsidiaries as a result of revaluation increment on property, plant and equipment of subsidiaries as follows:
2007 and 2006 Difference between the carrying amount and the revalued amount of property, plant and equipment (Note 4) Final income tax on revaluation increment on property, plant and equipment Deferred tax effect Minority interest Total 65,946,634 (7,124,851) 1,093,989 (77) 59,915,695

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

2007 and 2006 PT Indonesia Power PT Pembangkitan Jawa Bali PT Pelayanan Listrik Nasional Batam PT Indonesia Comnets Plus PT Artha Daya Coalindo Total 33,276,453 26,408,107 208,463 22,556 116 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 Beginning balance Additions Recognized as revenue during the period Ending balance 6,252,377 236,568 (131,119) 6,357,826 2006 5,858,062 233,725 (122,449) 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 Net additions Ending balance 4,128,328 43,968 4,172,296 3,795,907 78,585 3,874,492

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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) - Continued
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 currencies *) International Bank for Reconstruction and Development (IBRD) Rupiah US$ 421,105,101 Asian Development Bank (ADB) Rupiah US$ 183,236,704 Kreditanstalt Fur Wiederaufbau, Jerman (KFW) Rupiah EUR 52,431,791 US$ 22,858,001 United Stated Agency for International Development (USAID) Export-Import Bank of The United States Rupiah US$ 6,321,607 Japan Bank for International Cooperation JPY 25,115,171,471 US$ 75,331,408 Generale Bank S.A., Belgia dan Barclay Bank PLC - EUR 316,615 Midland Bank Public Limited Company Banque Paribas Rupiah GBP 16,111,743 EUR 32,772,880 Bank Austria Aktiengesellschaft Rupiah EUR 8,885,772 Bank of China China Exim Bank - US$ 4,078,474 Mitsui Leasing - US$ 1,666,743 Islamic Development Bank - US$ 496,634 Calyon and BNP Paribas - EUR 6,724,396 Fortis Bank Belgia - EUR 2,012,023 West Merchant Bank Limited - GBP 4,126,691 ABN AMRO N.V. - EUR 21,315,296 MKB Hungaria - US$ 1,146,416 Efic Australia - AUD 21,523,273 Kingdom of Belgium - EUR 1,616,310 Total *) In full amount **) Include grace periods in terms of payments 2007 Current maturities Long-term portion

Total

Interest rate %

Period **) Years

1,155,985 3,839,637 2,252,827 1,670,752

277,419 320,296 261,192 209,859

878,566 IBRD + (1.65% - 3.50%) 3,519,341 IBRD + 0.5% 1,991,635 1,460,893 ADB + (1.75% - 3.75%) ADB + 0.5%

1987-2013 1994-2023 1989-2016 1995-2027

362,068 637,272 208,419 2,578 960 57,640 1,948,435 686,872 3,848 220,161 2,455 288,308 398,331 3,510 108,000 989 37,188 15,197 4,528 81,730 24,455 73,844 259,072 10,453 158,491 19,645 14,533,650

75,720 117,660 19,832 834 960 31,773 98,955 2,565 23,776 2,455 18,019 32,154 3,510 20,445 989 11,412 648 6,811 1,223 73,844 198,973 909 15,879 1,828,112

286,348 519,612 188,587 1,744 25,867 1,849,480 686,872 1,283 196,385 270,289 366,177 87,555 37,188 3,785 3,880 74,919 23,232 60,099 9,544 142,612 19,645 12,705,538

7.6%-9% and SBI + 1% KFW + 0.5% 4.75% + 0.35% 2% 8% or SBI + 1% 7.04% - 7.1% 4.7% + 4.8% Floating + 0.85% 7.1% SBI + 1% SBI + 1% 3.84% 6.39% SBI + 1% 4% 3.5% - SBI + 1% 3.5% + 0.5% LIBOR + 1.2% 8% 5.32% 4.82% 6.45% 7.10% 4.81% + 0.5% 4% 4%

1980-2014 1997-2020 2004-2018 1979-2009 1988-2008 1996-2008 1996-2045 2005-2011 1996-2008 1995-2020 1995-2007 1998-2022 1996-2018 1995-2007 1996-2012 1995-2007 2004-2018 1997-2008 1996-2012 2004-2019 2005-2017 1996-2007 1995-2008 2004-2018 1998-2022 2005-2033

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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) - Continued
Foreign currencies *) International Bank for Reconstruction and Development (IBRD) Rupiah US$ 420,361,283 Asian Development Bank (ADB) Rupiah US$ 203,179,069 Kreditanstalt Fur Wiederaufbau, Germany (KFW) Rupiah EUR 41,473,014 US$ 3,164,173 United Stated Agency for International Development (USAID) Export-Import Bank of The United States Rupiah US$ 12,065,833 Japan Bank for International Cooperation Rupiah JPY 26,478,731,635 US$ 25,349,944 Meespierseon NV Belanda Generale Bank S.A., Belgium and Barclay Bank PLC Rupiah EUR 530,337 Midland Bank Public Limited Company Swiss Bank Banque Paribas Rupiah GBP 17,205,971 EUR 35,045,224 Ryoshin International (Hongkong) Limited Bank Austria Aktiengesellschaft Rupiah EUR 10,553,851 Bank of China Sumisho Leasing - US$ 1,273,683 Nebula Leasing - US$ 11,426,542 Mitsui Leasing - US$ 2,515,633 Islamic Development Bank - US$ 1,425,893 Calyon and BNP Paribas - EUR 5,888,163 West Merchant Bank Limited - GBP 6,912,870 ABN AMRO N.V. - EUR 37,874,399 MKB Hungaria - US$ 354,340 Efic Australia - AUD 22,080,732 Total *) In full amount **) Include grace periods in terms of payments 2006 Current maturities Long-term portion

Total

Interest rate %

Period **) Years

1,312,900 3,814,779 2,391,508 1,843,850

291,998 245,508 250,665 189,821

1,020,902 IBRD + (1.65% - 3.50%) 3,569,271 IBRD + 0.5% 2,140,843 1,654,029 ADB + (1.75% - 3.75%) ADB + 0.5%

1987-2013 1994-2023 1989-2016 1995-2027

505,103 451,755 28,715

145,863 49,959 13,632

359,240 401,796 15,083

7.6%-9% and SBI + 1% KFW + 0.5% 4.75% + 0.35%

1980-2014 1997-2020 2004-2018

3,388

810

2,578

2%

1979-2009

27,804 109,498

12,964 31,879

14,840 77,619

8% or SBI + 1% 7.04% - 7.1%

1988-2008 1996-2008

16,259 2,038,332 230,051 2,338

16,259 273,214 2,338

1,765,118 230,051 -

SBI + 1% 4.7% - 4.8% Floating + 0.85% SBI + 1%

1995-2006 1996-2045 2005-2011 1995-2006

9,438 5,777 236,489 110,322 16,321 272,206 381,739 13,324 10,532 114,960 2,968 11,559 103,696 22,829 12,940 64,138 109,365 412,556 3,216 147,197 14,837,852

4,739 2,311 23,776 55,161 13,866 16,012 14,468 6,627 7,022 24,609 989 11,559 51,848 3,805 12,940 43,746 179,213 13,800 2,011,401

4,699 3,466 212,713 55,161 2,455 256,194 367,271 6,697 3,510 90,351 1,979 51,848 19,024 64,138 65,619 233,343 3,216 133,397 12,826,451

SBI + 1% 7.1% SBI + 1% SBI + 1% SBI + 1% 3.84% 6.39% SBI + 1% SBI + 1% 4% 3.5% - SBI + 1% LIBOR + 1.2% LIBOR + 1.2% LIBOR + 1.2% 8% 5.32% 6.45% 7.10% 4.81% + 0.5% 4%

1995-2007 1996-2008 1995-2020 1995-2007 1995-2007 1998-2022 1996-2018 1995-2007 1995-2007 1996-2012 1995-2007 1995-2007 1996-2007 1997-2008 1996-2012 2004-2019 1996-2007 1995-2008 2004-2018 1998-2022

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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) - Continued Details of two-step loans in foreign currencies are as follows :
Original currency *) US$ JPY EUR Others **) Total 2007 Rp equivalent 6,530,686 1,948,435 1,532,354 520,644 10,532,119 Original currency *) 2006 Rp equivalent 6,181,131 2,038,333 1,430,926 528,768 10,179,158

716,241,088 25,115,171,471 126,075,083 57,100,630

681,116,392 26,478,731,635 131,364,988 58,266,417

*) **)

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 Investment Fund Account No. RDI-393/DP3/2001 No. RDI-298/DP3/1996 Total Less current maturities No. RDI-393/DP3/2001 No. RDI-298/DP3/1996 Total Long-term portion 3,966,201 23,000 3,989,201 293,793 23,000 316,793 3,672,408 2006 4,259,993 46,000 4,305,993 293,793 23,000 316,793 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 Companys 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 semiannually 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. - 37 -

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
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 Later than 1 year and not later than 2 years Later than 2 years Total minimum lease payments Less interest Present value of minimum lease payments Less current maturity Long-term lease liabilities - net 1,831,346 1,760,567 18,605,208 22,197,121 7,880,674 14,316,447 775,084 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 Companys rights based on PLN Settlement Agreement, which will be returned if the payment of lease liabilities has been made, and recognition of CJPs transfer of rights to its creditors, as guarantee of CJPs obligations.

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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) - Continued

28. BANK LOANS

2007 Bank loans Bank Bukopin Bank Bumiputera Indonesia Bank Rakyat Indonesia Total Less current maturities Bank Bukopin Bank Bumiputera Indonesia Bank Rakyat Indonesia Total Long-term portion 2006

28,116 9,100 270 37,486

4,267 4,267

4,612 9,100 270 13,982 23,504

4,267 4,267 -

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 ADCs 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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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 29. BONDS PAYABLE Details of bonds payable are as follows:
2007 Guaranteed Notes, with nominal amount of US$ 550 million, net of unamortized debt issuance costs of US$ 8.3 million Guaranteed Notes, with nominal amount of US$ 450 million, net of unamortized debt issuance costs of US$ 4.9 million PLN VIII Year 2006, with nominal amount of Rp 2,200,100 million, net of unamortized debt issuance costs of Rp 11,914 million Syariah Ijarah PLN I Year 2006, with nominal amount of Rp 200,000 million, net of unamortized debt issuance costs of Rp 1,071 million 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 PLN VI Year 1997, with nominal amount of Rp 600,000 million Total Less current maturity - PLN VI Year 1997 Long-term portion 4,938,812 4,058,835 2,188,186 2006 -

198,929

1,492,312 600,000 13,477,074 600,000 12,877,074

1,491,279 600,000 2,091,279 2,091,279

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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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 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 Moodys Investors Service, Inc. and BB- by Standard and Poors 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 Companys 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 Companys 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. - 41 -

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

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 Companys 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 bonds 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 bonds 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 Companys 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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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 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 Companys 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 Companys 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 Companys 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 Governments 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 PT Paiton Energy (US$ 694,828,088 in 2007 and US$ 709,020,264 in 2006) PT Jawa Power (US$ 57,932,459 in 2007 and US$ 58,026,935 in 2006) Magma Nusantara Ltd. and Pertamina (US$ 25,000,000) Total Less current maturities Long-term portion 2006

6,335,105 528,228 227,950 7,091,283 (376,322) 6,714,961

6,434,430 526,594 6,961,024 (140,909) 6,820,115

b. By Installment Payments
2007 Payment due on years 2006 2007 2008 2009 and thereafter Total payments Less interest Present value of payments Less current maturities Long-term portion 2006

630,054 536,138 12,384,068 13,550,260 (6,458,977) 7,091,283 (376,322) 6,714,961

400,208 533,610 533,610 12,317,497 13,784,925 (6,823,901) 6,961,024 (140,909) 6,820,115

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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) - Continued

31. PAYABLE TO RELATED PARTIES

2007 Yayasan Pendidikan dan Kesejahteraan - PLN Loan Acquisition of stock PT Mitra Energy Batam Employees Total 2006

37,325 12,989 82,853 133,167

16,800 11,500 13,455 49,355 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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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 33. TRADE ACCOUNTS PAYABLE This account represents payables arising from purchases of electricity, fuel, goods and services, as follows : a. By Creditor
2007 Related parties (Note 50) Purchases of electricity PT Sumber Segara Primadaya Rupiah US$ PT Geo Dipa Energi PT Dalle Energy Batam PT Mitra Energy Batam Purchases of fuel, goods and services PT Daya Citra Mulia Koperasi Karyawan Total of trade accounts payable to related parties Third parties Purchases of electricity PT Paiton Energy Rupiah US$ PT Jawa Power Rupiah US$ Chevron Geothermal Salak Ltd. and Dayabumi Salak Pratama Ltd. US$ Pertamina and Magma Nusantara Ltd US$ Others (each below 5% of subtotal) Rupiah US$ Subtotal Purchases of fuel, goods and services Pertamina Rupiah US$ PT Tambang Batubara Bukit Asam Others (each below 5% of subtotal) Rupiah US$ EUR JPY Subtotal Total of trade accounts payable to third parties Total trade accounts payable 2006

64,238 96,898 1,109 21,948 7,327 8,013 14,104 213,637

14,110 18,204 9,235 6,599 4,461 15,807 68,416

303,335 592,428 266,519 490,593 132,957 72,322 166,210 145,079 2,169,443

239,493 601,060 277,492 509,222 134,983 2,897,516 47,500 150,895 4,858,161

20,428,329 215,363 617,949 2,242,997 159,990 40,215 6,575 23,711,418 25,880,861 26,094,498

16,602,208 601,625 173,263 2,403,807 136,575 16,326 6,525 19,940,329 24,798,490 24,866,906

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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) - Continued b. By Age Category
2007 1 - 180 days 181 - 360 days More than 360 days Total 25,888,292 87,245 118,961 26,094,498 2006 21,780,863 519,275 2,566,768 24,866,906

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

2007 Original currency *) US$ EUR JPY Total 209,117,964 3,308,701 84,764,499 Rp equivalent 1,906,738 40,215 6,575 1,953,528 Original currency *) 558,011,118 1,498,202 84,764,499 2006 Rp equivalent 5,063,951 16,326 6,525 5,086,802

*)

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 Difference on fuel purchasing price in excess of quota Public street lights Advance sales of electricity Acquisition of property, plant and equipment Rupiah US$ - US$ 10,391,572 in 2007 and US$ 13,861,149 in 2006 Others Total Less long-term portion Difference on fuel purchasing price in excess of quota Acquisition of property, plant and equipment Total Current maturities 408,739 319,226 499,118 156,836 94,750 445,964 1,924,633 272,493 165,904 438,397 1,486,236 2006 635,817 301,704 350,365 164,775 125,790 300,553 1,879,004 454,155 253,702 707,857 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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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

35. TAXES PAYABLE

2007 Current tax (Note 47) 2007 2006 2005 2004 Income taxes Article 21 Article 22 Article 23 Article 15, 25 and 26 Article 29 for the year 2005, 2001 and 1998 Value added tax Stamp duty Land and building taxes Tax on revaluation increment on property, plant and equipment current maturities Total 241,082 817,717 203 25,090 5,176 25,121 5,279 1,282 32,228 5,489 2,157 34,893 1,195,717 2006 186,781 462,172 27,088 13,680 4,016 53,993 2,584 37,029 5,026 3,391 2,342,248 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 Less cash payments Ending balance Less current maturities Long-term portion

688,959 688,959 (688,959) -

1,953,289 (300,000) 1,653,289 (1,653,289) -

2,642,248 (300,000) 2,342,248 (2,342,248) -

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 Interest and financing charges Lease liability Tax payable on revaluation increment on property, plant and equipment Contingent rent on lease liability Two-step loans Government loans Bonds payable Electricity purchase payable Total Operational expenses Total 465,665 425,432 361,277 4,695 390,875 41,742 1,689,686 112,510 1,802,196 2006 465,939 247,911 23,156 33,340 2,110 772,456 75,128 847,584

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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) - Continued Details of accrued expenses in foreign currencies are as follows :
2007 Original currency *) US$ JPY EUR Others **) Total 65,215,298 11,489,939,034 1,214,306 723,161 Rp equivalent 594,633 891,355 14,759 6,594 1,507,341 Original currency *) 5,536,497 1,324,360,458 2,166,148 1,180,578 2006 Rp equivalent 50,244 101,947 23,595 10,714 186,500

*) **)

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 Public Government State-owned enterprises Indonesian Armed Forces Total 16,713,947 715,938 585,799 105,167 18,120,851 2006 15,551,759 673,229 507,716 105,355 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. GOVERNMENTS 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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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 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 Transformer rental Upgrading of electricity power and administration fees Services and others Total 13,270 21,385 141,556 176,211 2006 22,393 12,269 91,614 126,276

40. FUEL AND LUBRICANTS

2007 Fuel Solar High Speed Diesel Residue Solar Industrial Diesel Others Total Non fuel Natural gas Coal Geothermal Lubricants Water Total Total 9,036,076 1,743,806 18,550 11,021 10,809,453 848,168 1,603,774 386,426 49,473 17,302 2,905,143 13,714,596 2006 8,514,281 1,802,690 13,776 5,203 10,335,950 948,613 1,195,882 331,213 45,322 19,450 2,540,480 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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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
41. ELECTRICITY PURCHASES
2007 PT Paiton Energy PT Jawa Power PT Sumber Segara Primadaya Chevron Geothermal Salak Ltd. and Dayabumi Salak Pratama Ltd. PT Asrigita Prasarana PT Energy Sengkang Pertamina and Magma Nusantara Ltd. Pertamina, Chevron Drajat Ltd., Texaco Drajat Ltd. and PT Drajat Geothermal Ind. PT Makassar Power PT Cikarang Listrindo PT Dalle Energy Batam PT Mitra Energy Batam PT Indo Matra Power PT Geo Dipa Energy PO Jatiluhur PT Metaepsi Pejebe Power Generation Others - diesel rental Total 1,338,523 1,186,484 425,053 207,519 115,609 112,631 102,353 96,852 85,386 51,855 49,833 19,536 17,780 12,547 10,604 8,969 247,093 4,088,627 2006 1,292,080 1,212,295 14,107 201,170 129,332 122,361 199,664 88,827 70,802 57,640 18,381 18,179 18,542 28,520 219,280 3,691,180

The details of suppliers which represent more than 10% of the total purchases of electricity are as follows :
2007 % *) PT Paiton Energy PT Jawa Power PT Sumber Segara Primadaya Total 1,338,523 1,186,484 425,053 2,950,060 32.74 29.02 10.40 72.16 1,292,080 1,212,295 14,107 2,518,482 2006 % *) 35.11 32.85 0.38 68.34

42. MAINTENANCE EXPENSES

This account represents spare parts used and contractor fees for maintenance purposes.
2007 Spare parts used Contractor fees Total 644,770 477,330 1,122,100 2006 592,185 390,203 982,388

43. PERSONNEL EXPENSES

2007 Employee benefits (Note 49) Salaries Allowances Bonus, performance and incentives Others Total 637,127 362,069 358,929 24,092 203,272 1,585,489 2006 556,384 269,001 290,201 9,049 230,455 1,355,090

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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) - Continued
44. OTHER OPERATING EXPENSES
2007 Data processing Honorarium Travel Technological information Billing collection and orderliness of of electricity used Postage, telephone and telegraph Consumables Rent Gas, electricity and water Stationeries Insurance Marketing Dues and security Printing materials and promotion Vehicles Provision for doubtful accounts Others Total 132,346 101,393 91,984 56,867 51,896 47,161 44,945 42,106 40,445 34,575 32,786 23,327 22,446 20,157 14,627 6,959 97,150 861,170 2006 113,318 67,754 86,094 26,842 60,726 15,406 38,880 50,802 38,566 25,076 36,331 9,764 10,532 13,109 22,095 32,550 67,683 715,528

45. INTEREST EXPENSE AND FINANCING CHARGES

2007 Lease liability Bonds payable Two-step loans Electricity purchase payable Government loans Bank loans Tax payable on revaluation increment on property, plant and equipment Others Total 489,620 344,562 201,501 101,939 40,310 1,884 1,434 1,181,250 2006 56,572 196,137 61,236 41,610 678 465,939 1,094 823,266

46. OTHER INCOME (EXPENSES) - NET

2007 Administrative penalty income Claim and service income Fees for street lights Gain on sale of property, plant and equipment Equity in net gain (loss) of associates (Note 6) Research Loss on impairment of property, plant and equipment (Note 7) Others Total 84,229 15,615 11,084 760 5,774 (451) (119,286) (33,179) (35,454) 2006 69,006 21,633 9,080 695 (5,509) (392) (102,366) (34,919) (42,772)

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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) - Continued
47. INCOME TAX

Tax expense of the Company and its subsidiaries consist of the following :
2007 Current tax Deferred tax Total tax expense 264,646 150,670 415,316 2006 191,824 477,557 669,381

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 Income before tax attributable to subsidiaries Income (loss) before tax - the Company Temporary differences : Lease expenses Customer connection fees Depreciation Employee benefits Provision for doubtful accounts and decline in value of inventories Amortization of bonds issuance costs Nondeductible expenses (nontaxable income): Benefits in kind Depreciation of guest house Interest income subjected to final tax Other nondeductible expenses Tax loss before tax loss carryforward Tax losses for the year 2006 2005 - net of adjustment 2004 - net of adjustment 2003 2002 - net of adjustment Accumulated tax losses - the Company (435,808) (1,144,600) (1,580,408) 431,483 102,569 (1,048,798) 365,436 4,685 (1,301) 102,422 2,313 (96,990) 71,571 (1,647,018) 1,721,307 (1,299,566) 421,741 104,402 (990,715) 322,579 30,833 55,238 2,269 (31,388) 53,611 (31,430)

(7,233,904) (5,291,969) (3,594,188) (5,960,838) (23,727,917)

(10,409,554) (7,618,742) (3,594,188) (8,254,356) (29,908,270)

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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) - Continued

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

2007 Current tax expense The Company Subsidiaries Total Less prepaid taxes The Company Income tax Article 22 Article 23 Fiscal exit Total Subsidiaries Total Current tax expense net of prepaid taxes Details Current tax payable The Company Subsidiaries Total current tax payable Income tax overpayment The Company Subsidiaries Total income tax overpayment Total - Net 264,646 264,646 2006 191,824 191,824

377 377 24,842 25,219 239,427

55 41 68 164 12,218 12,382 179,442

241,082 241,082

186,781 186,781

(377) (1,278) (1,655) 239,427

(164) (7,175) (7,339) 179,442

Deferred Tax

The deferred tax charged (credited) to income during the period is as follows:
2007 Depreciation of property, plant and equipment Employee benefits Leases Customer connection fees Tax losses Others Total 422,527 (102,792) (129,445) (31,554) 3,913 (11,979) 150,670 2006 550,910 (106,389) (33,345) 70,232 (3,851) 477,557

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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) - Continued 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 Deferred tax assets Deferred income Tax losses Employee benefits obligation Others Total Deferred tax liabilities Property, plant and equipment Deferred tax assets 44,413 75,660 1,771 7,908 129,752 2006 38,159 25,672 1,124 7,300 72,255

(71,813) 57,939

(63,820) 8,435

Deferred Tax Liabilities This account represents deferred tax liabilities after deducting the deferred tax assets from the related entities as follows: 2007 Deferred tax assets Employee benefits obligation Tax losses Deferred income Leases Others Total Deferred tax liabilities Prepaid pension Property, plant and equipment Others Total Deferred tax liabilities 3,961,635 1,860,999 24,989 4,657 5,852,280 2006 3,651,077 77,981 1,750,750 4,547 5,484,355

(53,303) (13,370,155) (793) (13,424,251) (7,571,971)

(72,771) (11,259,189) (11,331,960) (5,847,605)

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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) - Continued 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 Income before tax attributable to subsidiaries Income (loss) before tax - the Company Tax expense at prevailing rate Tax effect of Unrecognized deferred tax on Tax losses Provision for doubtful accounts and decline in value of inventories Recognition of prior year's deferred tax liabilities Nondeductible expenses (nontaxable income) Benefits in kind Depreciation of guest house Interest income subjected to final tax Other nondeductible expenses Tax expense - the Company Tax expense - subsidiaries Total (435,808) (1,144,600) (1,580,408) (474,123) 1,721,307 (1,299,566) 421,741 126,522

494,106 1,405 30,727 694 (29,097) 21,471 45,183 370,133 415,316

9,429 9,250 111,701 16,571 681 (9,416) 16,083 280,821 388,560 669,381

Unrecognized deferred tax asset is as follows:

2007 The Company Tax losses Others Total Subsidiaries - tax losses Total 7,118,375 94,387 7,212,762 7,212,762 2006 8,972,481 103,430 9,075,911 81,224 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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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 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. KEP078/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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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 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 Expected rate return on plan assets Discount rate per annum Rate of salary increase per annum Pension plan Other post-employment and long-term benefits Rate of health cost increase : 56 years : 11% : 11% : 5% : 8% : 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 : 2007 Post-employment benefit Other Pension Other postHealth long-term plan employment care benefits benefits Total
Current service cost Past service cost Expected return on plan assets Interest costs Actuarial losses (gains) Deferred asset due to asset limitation Total 15,355 5,894 (98,018) 79,232 (8,737) 68,029 61,755 68,918 6,436 172,635 846 248,835 41,118 149,568 4 190,690 40,829 18,645 76,373 135,847 166,220 12,330 (98,018) 420,080 68,486 68,029 637,127

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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) - Continued

2006 Post-employment benefit Pension Other postHealth plan employment care benefits Current service cost Past service cost Expected return on plan assets Interest costs Actuarial losses Deferred asset due to asset limitation Total 16,697 6,914 (88,396) 97,102 1,159 5,660 39,136 61,297 6,436 151,386 287 219,406 41,332 170,691 7,428 219,451

Other long-term benefits 37,666 17,819 22,906 78,391

Total 156,992 13,350 (88,396) 436,998 31,780 5,660 556,384

The Company and its subsidiaries employee benefit obligations (prepaid pension) are as follows:
2007 Prepaid employee Employee benefit obligations benefit, Other postHealth Other pension plan employee care benefits long-term Present value of obligation Unrecognized past service cost Unrecognized actuarial gains (losses) Fair value of plan assets Deferred asset due to asset limitation Employee benefit obligations (prepaid pension) 2,991,366 (193,312) 586,101 (3,670,804) 108,972 (177,677) 7,273,370 (269,315) (626,217) 6,377,838 6,358,950 (296,305) 6,062,645 770,472 770,472

Total 14,402,792 (269,315) (922,522) 13,210,955

2006 Prepaid employee Employee benefit obligations benefit, Other postHealth Other pension plan employee care benefits long-term Present value of obligation Unrecognized past service cost Unrecognized actuarial gains (losses) Fair value of plan assets Deferred asset due to asset limitation Employee benefit obligations (prepaid pension) 3,200,388 (235,396) 98,635 (3,311,857) 5,660 (242,570) 5,879,706 (295,058) 482,290 6,066,938 6,246,240 (815,707) 5,430,533 676,791 (257) 676,534

Total 12,802,737 (295,058) (333,674) 12,174,005

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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) - Continued Movements in the Company and its subsidiaries employee benefit obligation (prepaid pension) are as follows: 2007 Prepaid employee Employee benefit obligations benefit, Other postHealth Other pension plan employee care benefits long-term Total
Beginning balance Expense for the period Payments of contribution Payments benefits Ending balance Current maturities Long-term portion (217,406) 61,755 (22,026) (177,677) 169,132 (8,545) 6,298,361 248,835 (169,358) 6,377,838 (868,202) 5,509,636 5,892,439 190,690 (20,484) 6,062,645 (129,322) 5,933,323 677,911 135,847 (43,286) 770,472 (260,995) 509,477 12,868,711 575,372 (233,128) 13,210,955 (1,258,519) 11,952,436

2006 Employee benefit obligations Prepaid employee benefit, Other postHealth Other pension plan employee care benefits long-term Beginning balance Expense for the period Payments of contribution Payments benefits Ending balance Current maturities Long-term portion (253,439) 39,136 (28,267) (242,570) 230,504 (12,066) 5,918,719 219,406 (71,187) 6,066,938 (482,652) 5,584,286 5,250,897 219,451 (39,815) 5,430,533 (322,324) 5,108,209 648,098 78,391 (49,955) 676,534 (340,040) 336,494

Total 11,817,714 517,248 (160,957) 12,174,005 (1,145,016) 11,028,989

50. TRANSACTIONS WITH RELATED PARTIES

The Company and its subsidiaries do not need to disclose the transactions with State-owned/Regionalowned 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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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

Transactions with Related Parties

Notes Receivables from related parties PT Sumber Segara Primadaya PT Tenaga Listrik Jayapura PT Tenaga Listrik Bintan PT TJK Power PT Dalle Energy Batam PT Bajradaya Sentranusa PT Mitra Energy Batam Directors and employees Subtotal Trade accounts payable PT Sumber Segara Primadaya PT Geo Dipa Energi PT Dalle Energy Batam PT Mitra Energy Batam PT Daya Citra Mulia Koperasi Karyawan Subtotal Payable to related parties Yayasan Pendidikan dan Kesejahteraan - PLN Acquisition of stock PT Mitra Energi Batam Employees Subtotal Total Electricity purchases PT Sumber Segara Primadaya PT Dalle Energy Batam PT Geo Dipa Energi PT Mitra Energy Batam Total Coal purchases PT Daya Citra Mulia Building rent Yayasan Pendidikan dan Kesejahteraan - PLN 8 522,533 10,561 11,571 18,614 14,870 5,035 2,857 644,362 1,230,403 33 161,136 1,109 21,948 7,327 8,013 14,104 213,637 31 37,325 12,989 82,853 133,167 346,804 41 425,053 49,833 12,547 19,536 506,969 40 39,603 44 6,733 0.78% 8,506 1.19% 0.29% 30,728 0.24% 10.40% 1.22% 0.31% 0.48% 12.41% 14,107 18,381 18,542 18,179 69,209 0.38% 0.50% 0.50% 0.49% 1.87% 0.04% 0.02% 0.09% 0.15% 0.36% 16,800 11,500 13,455 49,355 91,110 159,526 0.02% 0.01% 0.02% 0.06% 0.11% 0.17% 0.16% 0.00% 0.02% 0.01% 0.01% 0.01% 0.21% 14,110 18,204 9,235 6,599 4,461 15,807 68,416 0.02% 0.02% 0.01% 0.01% 0.01% 0.01% 0.06% 0.20% 0.00% 0.00% 0.01% 0.01% 0.00% 0.00% 0.25% 0.47% 484,241 5,035 561,271 1,050,547 0.22% 0.07% 0.10% 0.39% 2007 % *) 2006 % *)

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

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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) - Continued

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:
2007 JPY *) Monetary assets Related party receivables Restricted cash in bank and time deposits Cash and cash equivalent Short-term investment Total monetary assets Monetary liabilities Two-step loans Lease liability Bonds payable Electricity purchase payable Other payables Project cost payable Trade accounts payable Accrued expenses Total monetary liabilities Net monetary liabilities Rupiah equivalent (in millions) Total in Rupiah - net (in millions) 42,324,888,953 46,430,048 42,371,319,001 USD *) 59,735,304 137,416,321 990,066,969 5,200,000 1,192,418,594 EUR *) 2,035,371 2,035,371 Others **) 393,216 393,216

25,115,141,584 184,545,000,000 1,964,262,100 84,764,499 11,489,939,034 223,199,107,217 (180,827,788,216) (14,028,620) (31,020,999)

716,241,088 986,800,504 777,760,547 10,391,572 38,525,318 209,117,964 65,215,298 2,804,052,291 (1,611,633,697) (14,694,876)

125,764,864 16,663,778 3,308,701 1,214,306 146,951,649 (144,916,278) (1,761,356)

57,395,411 1,075,598 723,161 59,194,170 (58,800,954) (536,147)

*) **)

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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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 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 9,075 Yen 78 77 EUR 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 :
2007 Outside Java Elimination

Java Revenue External revenue Inter-segment revenue Total Segment results Unallocated operating expenses Income from operations Unallocated other charges Tax expense Net loss Segment Assets Unallocated assets Total consolidated assets Segment Liabilities Unallocated liabilities Total consolidated liabilities 170,492,723

Total

21,325,287 21,325,287 12,209,372

3,878,355 3,878,355 (3,283,043)

11,860,637

25,203,642 25,203,642 20,786,966 (19,611,675) 1,175,291 (1,611,099) (415,316) (851,124)

70,498,214

(121,953,090)

119,037,847 137,124,382 256,162,229 5,099,441 111,925,448 117,024,889

92,317,356

84,357,343

(171,575,258)

- 62 -

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
2006 Outside Java Elimination

Java Revenue External revenue Inter-segment revenue Total Segment results Unallocated operating expenses Income from operations Unallocated other charges Tax expense Net income Segment Assets Unallocated assets Total consolidated assets Segment Liabilities Unallocated liabilities Total consolidated liabilities 172,295,864

Total

18,693,165 18,693,165 8,290,874

3,539,831 3,539,831 (3,146,412)

12,079,222

22,232,996 22,232,996 17,223,684 (17,115,959) 107,725 1,721,307 (669,381) 1,159,651

59,482,005

(114,934,181)

116,843,688 111,429,555 228,273,243 3,126,242 84,132,890 87,259,132

93,996,055

66,587,543

(157,457,356)

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 supply Revenue from sale of electricity by tariff category Industry Residentials Business Public Subtotal Government subsidy Customer connection fees Upgrading of electricity power and administration fees, and transformer rental Subtotal Others Total

6,777,314 6,691,883 3,508,833 1,142,821 18,120,851 6,775,461 131,119 34,655 25,062,086 141,556 25,203,642

6,610,599 5,905,742 3,259,186 1,062,532 16,838,059 5,146,212 122,449 34,662 22,141,382 91,614 22,232,996

- 63 -

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

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
Sector Tanjung Batu Samarinda Tanjung Batu Samarinda Gunung Belah Tarakan ST Indralaya Borang - Palembang Kaji - Palembang Belawan Kramasan - Palembang Teluk Lembu Gresik Gresik Gresik Sunyaragi Muara Karang and Tanjung Priok Cilegon - Jawa Barat Suppliers Pertamina - Medco (TAC) Pertamina - Semco (TAC) Medco Medco Medco Medco Pertamina Medco Kalila (Bentu) EMP Kangean Pertamina - Kodeco (TAC) EMP Kangean Pertamina Agreement number 0059-4.PJ/061/DIRUT/2003 1307-1.PJ/040/DIR/2005 0073-1.PJ/061/DIR/2002 0073-2.PJ/061/DIR/2002 00145.PJ/060/DIR/2003 0068.PJ/DIR/060/2003 1331-3.3PJ/040/2005 0005-1.PJ/041/DIR/2006 1257.PJ/040/DIR/2005 1331-1.PJ/040/DIR/2005 0059-2.PJ/06/DIR/2003 008.PJ-PJB-EMP/VI/2005 43.A.PJ/061/IP/2004 Duration 2003-2008 2006-2016 2002-2012 2002-2012 2004-2013 2006-2013 2003-2011 2002-2011 2007-2013 2006-2020 2008-2024 2002-2013 2005-2007 2003-2008 Unit of Agreed measure quantity ***) TBtu TBtu TBtu TBtu TBtu TBtu TBtu BSCF TBtu TBtu TBtu BBTU BBTU BSCF 31,035 79,026 9,651 56,182 67,048 13,075 25,280 151,900 71,852 149,036 368,700 311 12.99 7,875

*) **)

652/BP00000/2003-50

2004-2017 2006-2018

BSCF TBtu

1,360.48 356,300

*) **)

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
Suppliers PT Adaro Indonesia PT Berau Coal PT Kideco Jaya Agung PT Tambang Batubara Bukit Asam PT Jorong Barutama Graston PT Daya Citra Mulia Others Contract number 055.PJ/061//1999 325.PJ/061/UBPSLA/2006 346.PJ/061/UBPSLA/2006 161.P/061/IP/2002 163-1.PJ/061/DIR/2004 050.PJNP/9212/1997/M 045.PJ/061/2004 Various Quantity in metric ton *) 1,000,000 2,000,000 1,500,000 61,000,000 960,000 300,000 3,300,000 664,000 Duration 2006-2011 2006-2007 2006-2007 2003-2012 2004-2013 2004-2009 2006-2010 2006-2007

*)

In full amount - 64 -

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 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 Companys 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
No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Companies PT Cikarang Listrindo PT Energi Sengkang Chevron Geothermal Salak Ltd. and Dayabumi Salak Pratama Ltd. PT Makassar Power PT Paiton Energy PT Jawa Power Pertamina, Chevron Drajat Ltd. Texaco Drajat Ltd. and PT Drajat Geothermal Ind. Pertamina and Magma Nusantara Limited 3) PT Geo Dipa Energy PT Asrigita Prasarana PT Sumber Segara Primadaya PT Dalle Energy Batam PT Mitra Energi Batam PT Indo Matra Power PT Metaepsi Pejebe Power Generation PT Pusaka Jaya Palu Power Total Projects/Locations Cikarang, West Java Sengkang, South Sulawesi Gunung Salak, West Java Pare-pare, South Sulawesi Paiton I, East Java Paiton II, East Java Fuels Gas Gas Geothermal MFO Coal Coal Capacity (MW) 150 200 330 60 1,230 1,220 140 110 60 150 600 55 55 17 80 27 4,484 AF 2) (%) 72 85 90 80 85 83 95 90 85 85 80 80 84 90 80 80 Duration 1996-2016 1997-19982028/2031 2002-2040 1999-2016 1994-2040 1995-2030 20002030/2040 1998-19992008/2029 2004-2046 2002-2022 2004-2036 2005-2016 2005-2016 2005-2017 2005-2025 2007-2032

Drajat, West Java Geothermal Wayang Windu, West Java Geothermal Dieng, Central Java Geothermal Palembang Timur, South Sumatera Gas Cilacap, Central Java Coal Panaran, Batam Island Gas Panaran, Batam Island Gas Industrial Zone, Batam Island Gas Gunung Megang, South Sumatera Gas Palu, Central Sulawesi Coal

- 65 -

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 ii. Not Yet in Operation (Development Stage)
No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. Companies PT Tenaga Listrik Amurang PT Tenaga Listrik Sibolga Pertamina and Bali Energy Ltd. 5) YPK PLN 6) Pertamina 7) PT Geo Dipa Energi 4) PT Bajradaya Sentranusa 8) PT Dizamatra Powerindo PT Cahaya Fajar Kaltim PT Metaepsi Pejebe Power Generation (unit 2) PT Gorontalo Energi PT Ketapang Arya Power PT Belitung Arya Power PT Tenaga Listrik Bintan PT Tenaga Listrik Jayapura PT Karya Putra Powerin PT Mahajaya Arya Satya PT Kassa Listrindo PT Bukit Pembangkit Innovative PT Listrik Nusantara Karimun PT Sepoetih Daya Prima PT Kalinda Kita Jaya PT Ranyza Energi PT General Energy bali PT Banyuasin Power Energy PT Inpola Meka Elektrindo PT Mambruk Sarana PT Fajar Futura Energi Luwu PT Equator Manunggal Power PT Bangka Manunggal Power PT Central Korporindo International PT Central Korporindo International PT Central Korporindo International Total Projects/Locations Amurang, North Sulawesi Sibolga, North Sumatera Bedugul, Bali Cibuni, West Java Kamojang, West Java Patuha, West Java Asahan I, North Sumatera Sibayak, North Sumatera East Kalimantan Gunung Megang, South Sumatera Gorontalo, Gorontalo Ketapang, West Kalimantan Belitung, Bangka Belitung Tanjung Pinang, Kep. Riau Jayapura, Papua Sampit, Central Kalimantan Tanah Grogot, East Kalimantan Lakatong, South Sulawesi Banjarsari, South Sumatera Tanjung Balai, Riau Lampung Tengah Kalianda Kuala Tanjung Celukan Bawang Banyuasin Parluasan, Sumut Telun Berasap, Jambi Ranteballa, Sulsel Pontianak Bangka Tembilahan Rengat Pangkalan Bun Fuels Coal Coal Geothermal Geothermal Geothermal Geothermal Water Geothermal Coal Gas Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Mini Hydro Mini Hydro Mini Hydro Coal Coal Coal Coal Coal Capacity (MW) 110 200 175 10 60 180 180 10 45 40 12 12 12 20 20 12 12 90 200 12 12 12 225 380 125 4.2 6 2.4 50 21 11 11 11 2,283 AF 2) (%) 80 80 95 90 90 85 75 90 75 80 80 80 80 80 80 80 80 80 80 80 80 90 84 85 80 80 80 80 80 80 80 80 80 Duration 2003-2033 2003-2033 2004-2040 1998-2028 2004-2034 2004-2046 2010-2040 1996-2030 2009-2039 2007-2027 2009-2033 2009-2033 2009-2033 2009-2033 2009-2033 2009-2033 2009-2033 2009-2033 2010-2034 2010-2035 2010-2035 2010-2035 2010-2035 2010-2035 2010-2035 2010-2035 2010-2035 2010-2035 2010-2035 2010-2035 2010-2035 2010-2035 2010-2035

1) 2) 3)

The agreements are effective from the date of signing and will last for about 19 to 30 years starting on the commercial operation date. AF = Power supply factor which should be absorbed by the Company. 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. 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. On February 19, 2004, amendment to ESC was signed.

4)

5)

- 66 -

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
6) 7) 8) 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. 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. 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 IPPs 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 PJBs 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 Perhutanis 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. - 67 -

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 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. 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.

j.

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 Companys 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 Companys transmission/distribution facilities, disputes with the Companys employees, and cases with customers and suppliers. Management believes that such claims is not material and will not significantly affect the Companys operations.

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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) - Continued 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 :
Contract amounts US$ *) Rupiah 334,457,346 865,162 Contract dates Commercial Operation Dates

Location PLTU 1 Banten (Suralaya Baru)

Capacity 1 x 625 MW

EPC Contractors Consortium CNTIC (China National Technical Import & Export Corporation, China National Machinery Import & Export Corporation, Zhejiang Electric Power Design Institute and PT Rekayasa Industri) Consortium Harbin Power Engineering Co. Ltd and PT Mitra Selaras Hutama Energi Consortium Chengda Engineering Corporation of China dan PT Truba Jurong Engineering Joint Operation of Sinomach, CNEEC, and PT Penta Adi Samudera Consortium Zelan Priamanaya - Tronoh

March 12, 2007 January 2010

PLTU 2 Jawa Timur (Paiton Baru)

1 x 660 MW

389,206,489

706,630

March 12, 2007 January 2010

PLTU 2 Banten (Labuan)

2 x 315 MW

339,479,648

1,398,292

March 12, 2007

July 2009

PLTU 1 Jawa Barat (Indramayu)

3 x 330 MW

696,734,421

1,497,545

March 12, 2007

July 2009

PLTU 1 Jawa Tengah 2 x 315 MW (Rembang) *) In full amount

308,000,000

2,248,800

March 21, 2007 August 2010

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.

- 69 -

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 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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