Corruption, inefficiency equal expensive electricity<\/p>\n
A'an Suryana
\nThe Jakarta Post
\nJakarta<\/p>\n
Business Watch Indonesia said that one of the main reasons for
\nthe higher electricity charges in Indonesia was widespread
\ninefficiency at state-owned electricity company PT Perusahaan
\nListrik Negara (PLN).<\/p>\n
The independent business watchdog said in a report that the
\nmain source of inefficiency was the purchase of fuel for PLN's
\npower generation facilities.<\/p>\n
It said that PLN was well aware of the \"price discrimination\"
\nin the purchase of fuel for years, but unfortunately the company
\nhad done nothing to address the problem.<\/p>\n
The electricity company had purchased natural gas at prices
\nmuch higher than prices paid by other state enterprises.<\/p>\n
The firm bought natural gas from various domestic sources at
\nUS$2.45 to $3 per million British thermal units (MMBTU), while
\nother businesses bought it more cheaply.<\/p>\n
Fertilizer, petrochemical and steel companies, for example,
\nbought natural gas in recent years at between $0.65 to $2 per
\nMMBTU.<\/p>\n
The gas price for PLN has also been much more expensive
\ncompared to the international market price.<\/p>\n
State electricity firm in Malaysia, for example, only paid for
\ngas at around $1.6 per MMBTU.<\/p>\n
PLN could not be reached for comment.<\/p>\n
But, a source at state oil and gas company Pertamina, the
\nmajor supplier for PLN's gas, has said that corruption had
\ncontributed to the inflated price of gas.<\/p>\n
Fuel expenses account for a significant component of PLN's
\noperating costs. Thus, cutting down on such obvious markups to at
\nleast a reasonable market price would greatly reduce overall
\nexpenses at PLN.<\/p>\n
The government late last year approved a request by PLN to
\nincrease electricity charges by an average of 6 percent each
\nquarter of this year. But the move has been postponed amid
\nwidespread public protests.<\/p>\n
The price increases, implemented since 2001, are aimed at
\nbringing up the domestic electricity prices to an average of 7
\nU.S. cents per kilowatt hour (kWh) by 2005. Currently, people are
\npaying for electricity at around 5.42 cents per kWh.<\/p>\n
According to Business Watch, in order for PLN to be able to
\nprovide the public with cheaper electricity, they need to
\nrenegotiate the power purchase contracts with several independent
\npower producers who were selling electricity at an inordinately
\nhigh price to PLN.<\/p>\n
Critics have said that the power purchase contracts, signed
\nduring the administration of Soeharto, was rife with corruption,
\nwhich, in turn, meant that PLN had to pay for the power at prices
\nwell above the market norm.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/corruption-inefficiency-equal-expensive-electricity-1447893297",
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"sponsor": "Okusi Associates",
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