Corruption, inefficiency equal expensive electricity
Corruption, inefficiency equal expensive electricity
A'an Suryana
The Jakarta Post
Jakarta
Business Watch Indonesia said that one of the main reasons for
the higher electricity charges in Indonesia was widespread
inefficiency at state-owned electricity company PT Perusahaan
Listrik Negara (PLN).
The independent business watchdog said in a report that the
main source of inefficiency was the purchase of fuel for PLN's
power generation facilities.
It said that PLN was well aware of the "price discrimination"
in the purchase of fuel for years, but unfortunately the company
had done nothing to address the problem.
The electricity company had purchased natural gas at prices
much higher than prices paid by other state enterprises.
The firm bought natural gas from various domestic sources at
US$2.45 to $3 per million British thermal units (MMBTU), while
other businesses bought it more cheaply.
Fertilizer, petrochemical and steel companies, for example,
bought natural gas in recent years at between $0.65 to $2 per
MMBTU.
The gas price for PLN has also been much more expensive
compared to the international market price.
State electricity firm in Malaysia, for example, only paid for
gas at around $1.6 per MMBTU.
PLN could not be reached for comment.
But, a source at state oil and gas company Pertamina, the
major supplier for PLN's gas, has said that corruption had
contributed to the inflated price of gas.
Fuel expenses account for a significant component of PLN's
operating costs. Thus, cutting down on such obvious markups to at
least a reasonable market price would greatly reduce overall
expenses at PLN.
The government late last year approved a request by PLN to
increase electricity charges by an average of 6 percent each
quarter of this year. But the move has been postponed amid
widespread public protests.
The price increases, implemented since 2001, are aimed at
bringing up the domestic electricity prices to an average of 7
U.S. cents per kilowatt hour (kWh) by 2005. Currently, people are
paying for electricity at around 5.42 cents per kWh.
According to Business Watch, in order for PLN to be able to
provide the public with cheaper electricity, they need to
renegotiate the power purchase contracts with several independent
power producers who were selling electricity at an inordinately
high price to PLN.
Critics have said that the power purchase contracts, signed
during the administration of Soeharto, was rife with corruption,
which, in turn, meant that PLN had to pay for the power at prices
well above the market norm.