Jakarta – Indonesia's state-owned electricity company, PT Perusahaan Listrik Negara (PLN), is seeking foreign loans to avert a likely power shortage in the main islands of Java and Bali, a report said Tuesday.

The initial priority is to raise 300 million dollars so work can start by year-end on a new 700 megawatt generating unit in north Jakarta, PLN president Eddie Widiono was quoted by the Jakarta Post as saying.

Widiono said loans will also be sought to expand another power plant in Surabaya, the capital of East Java and the country's second-largest city. He gave no details of the capacity or cost of the Surabaya expansion.

Widiono said electricity demand was fast outstripping supply and threatened to result in a power shortage in Java and Bali in 2004 unless generating capacity is expanded.

PLN estimates that without the new plants its generating capacity will only grow by about five percent per year from the current 18,600 megawatts while demand will increase by between seven to 11 percent from the current 17,000 megawatts.