PLN holds back on raising rates<\/p>\n
Fabiola Desy Unidjaja, The Jakarta Post\/Jakarta<\/p>\n
Though the recent fuel price increases will push up the
\nproduction costs of state electricity firm PLN by about 30
\npercent, the company has said it will not increase electricity
\nrates until June at the earliest.<\/p>\n
PLN director for power plants and primary energy generation
\nAli Herman Ibrahim could not say whether the increased production
\ncosts would be translated into a hike in electricity tariffs.<\/p>\n
"Production costs will rise by (an average of) 30 percent as
\nfuel costs make up about 40 percent of our total production
\ncosts. However, I cannot say whether we will raise the power
\nrates," Ali told The Jakarta Post on Friday.<\/p>\n
He said the company was already struggling to produce power
\nwithin its current cost structure.<\/p>\n
Earlier this week, PLN director Eddie Widiono said during a
\nbusiness visit to Singapore that the increase in fuel prices
\nwould likely force the company to increase its rates.<\/p>\n
He said there had been ongoing discussions about the issue
\nwith the government.<\/p>\n
Fuel prices rose by an average of 29 percent on March 1 after
\nthe government reduced subsidies on fuels, cutting their
\nallocations in the budget.<\/p>\n
The last time PLN raised power rates was in 2003 by an average
\nof 6 percent for every quarter -- a result of Megawati
\nSoekarnoputri government's commitment to gradually reduce fuel
\nsubsidies.<\/p>\n
However, with an eye on the general elections, the Megawati
\nadministration abandoned the commitment last year.<\/p>\n
The government may raise electricity rates in the second half
\nof the year if PLN cannot afford the higher fuel costs, said Yogo
\nPratomo, director general of electricity at the Ministry of
\nEnergy and Mineral Resources.<\/p>\n
"After the first half we will calculate the costs again.
\n(Whether rates will be raised) will depend on whether PLN
\nrecorded a profit or not in 2004," Yogo said as quoted by Dow
\nJones.<\/p>\n
The company has not released its 2004 financial results, but
\nPLN management has said the company likely remained in the black
\nlast year.<\/p>\n
At present, almost 25 percent of the total 25,218 power plants
\nacross the country are diesel oil-fired, with natural gas, coal
\nand geothermal energy powering the remainder.<\/p>\n
Every year, PLN requires some nine million kiloliters of oil
\nto fire the power plants.<\/p>\n
Ali said PLN has been working to reduce its dependence on oil
\nby gradually using cheaper alternative energy sources such as
\ncoal or natural gas.<\/p>\n
The government is planning to build nine more coal-fired power
\nplants and one more gas-fired power plant by 2007.<\/p>\n
"Our target is to reduce power plants using oil down to 5
\npercent (of the total) by 2008 -- that is why we are designing
\nmore coal-fired and gas-fired plants," Ali said.<\/p>\n
Due to soaring global oil prices, the company posted a decline
\nin profits from Rp 2.33 trillion (US$251.1 million) in 2003 to Rp
\n1.01 trillion last year.<\/p>",
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