Fuel price increase maybe lower than 30%<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government will go ahead with its plan to raise fuel
\nprices, but the price hike will not reach 30 percent as approved
\nby the House of Representatives, Minister of Energy and Mineral
\nResources Purnomo Yusgiantoro said Tuesday.<\/p>\n
\"Now, we have yet to decide the percentage of the price hike.
\nPerhaps the hike will not reach 30 percent. It might be 25
\npercent or even 15 percent. The point is, we do not want to
\nburden people,\" he was quoted by Antara as saying.<\/p>\n
The fuel price increase could be moderate given the decreasing
\ntrend in the oil price, Purnomo said.<\/p>\n
At present, the world price of oil is hovering around US$21
\nper barrel, below the assumption of the 2002 state budget at $22
\nper barrel.<\/p>\n
The House has approved the government's plan to raise fuel
\nprices by up to 30 percent this year as part of the efforts to
\ncut fuel subsidies.<\/p>\n
The exact timeframe for the fuel price increase remains
\nunclear but Coordinating Minister for the Economy Dorodjatun
\nKuntjoro-Jakti earlier said the price increases would be
\nimplemented this month.<\/p>\n
Purnomo reiterated that the government would delay raising the
\nfuel prices because it could further boost the government's
\nsubsidy, which is projected at Rp 30.37 trillion (US$2.9 billion)
\nthis year.<\/p>\n
Should the hike be delayed for one month, the subsidy could
\nrise by Rp 1 trillion, he added.<\/p>\n
Separately, president of state electricity company PT PLN
\nEddie Widiono said that PLN had raised electricity rates by an
\naverage of six percent for this month's bill.<\/p>\n
Eddie said the hike was necessary to help improve the
\ncompany's financial performance and to reduce the government's
\nsubsidies to the company.<\/p>\n
\"The hike is effective on Jan. 1. This is the first hike of
\nour plan to increase electricity rates by an average of six
\npercent every three months this year,\" he was quoted by Antara as
\nsaying.<\/p>\n
PLN has suffered losses for years because it sells the power
\nbelow its production costs. At present, electricity rates paid by
\nconsumers average Rp 360 per kilowatt hour (kWh) while PLN's
\ncosts average out to Rp 466 per kWh.<\/p>\n
The House has approved the government's proposal to raise
\npower rates by an average of six percent for every three months
\nthis year. This aims to reduce PLN's subsidy to Rp 4.1 trillion
\nthis year from last year's subsidy of Rp 4.7 trillion.<\/p>\n
Eddie said that the power price increases would lift PLN's
\nrevenue by about Rp 5.4 trillion, but this would be enough to
\ncover the company's operating costs.<\/p>\n
Despite the power price increase, he said, PLN would still
\nsuffer Rp 200 billion in losses this year.<\/p>\n
According to Eddie, PLN's expenses are projected to reach Rp
\n43.9 trillion this year, while its revenue, including the
\ngovernment's subsidy, will stand at Rp 43.7 trillion.<\/p>\n
These figures contrast with the ones earlier presented PLN's
\nfinance director Parno Isworo, who said the price increase would
\nlift PLN's revenue by Rp 10 trillion this year. But, he said, PLN
\nwould still suffer a Rp 1 trillion loss.<\/p>\n
Eddie also said the power price hike would financially enable
\nPLN to build 1.2 million new power lines for small-income
\nhouseholds across the nation. This is however, far lower than the
\ntotal demand of 4.5 million new power lines from that category of
\ncustomers.<\/p>",
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