Power prices to keep on rising until 2005<\/p>\n
Moch. N. Kurniawan, The Jakarta Post, Jakarta<\/p>\n
Strapped for cash, the state-owned electricity company, PLN,
\nhas increased power rates by an average of six percent for the
\nfirst quarter of the year, while each quarter of the year will
\nsee continued hikes.<\/p>\n
Is that enough? Not really.<\/p>\n
The company said Friday that it will continue raising its
\npower rates until after 2005, when the rates are expected to
\nreach the economic level of 7 cents per kilowatt hour (kwh).<\/p>\n
PLN's vice president for tariff and trade affairs, Aji
\nSabarto, told reporters that PLN, which had been in the red since
\n1998 amid the economic crisis, would only start to regain profits
\nafter its power price reached the 7-cent level.<\/p>\n
\"The 7-cent price level is the standard price in many
\ncountries for power companies to gain profits,\" he said.<\/p>\n
PLN has been approved by the House of Representatives to raise
\nelectricity rates by an average of 16 percent this year, in a bid
\nto cut government's subsidies for the company.<\/p>\n
The company has been relying on government subsidies to
\ncontinue operation since 1998.<\/p>\n
Under this year's budget, the government will reduce subsidies
\nfor PLN to Rp 4.1 trillion ($394 million) down from Rp 4.7
\ntrillion last year.<\/p>\n
As part of the 16 percent power price increase this year, PLN
\nhas raised power rates by an average 6 percent for the January-
\nMarch period. It will raise the rates by another 6 percent in
\nMarch, July and October.<\/p>\n
According to Aji, the 16 percent increase will lift PLN's
\nselling price to Rp 461 per kwh by the end of this year, or 98
\npercent of its production costs, which will reach Rp 466 or 4.5
\ncents Kwh this year, based the assumption of Rp 9,000 per U.S.
\ndollar.<\/p>\n
He noted, however, that PLN's production costs will increase
\nnext year, once PLN \"revaluated\" its assets, but declined to
\nelaborate.<\/p>\n
\"Our production costs will increase starting next year, once
\nwe proceed with our plan to revaluate assets,\" he said.
\n\"Therefore, we can't avoid power rate hikes until 2005.\"<\/p>",
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