Electricity charges up despite stronger rupiah
Electricity charges up despite stronger rupiah
The Jakarta Post, Jakarta
Public utility PT PLN will increase power charges by an
average of six percent this month as part of its government-
sanctioned quarterly rate hike policy.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
told reporters on Monday that the recent strengthening of the
rupiah against the U.S. dollar had helped ease PLN's cost burden,
but current electricity charges were still lower than PLN's
production costs.
As such, PLN still had to raise its charges to cover its
losses, the minister said.
"Based on our calculations, the economic level of electricity
charges for July should be Rp 630 per kilowatt hour (kWh). Now,
the rate is still Rp 560 per kWh," he was quoted by Antara as
saying after a meeting with the House of Representatives' energy
commission.
The government and PLN have repeatedly said that the economic
level for electricity charges is 7 U.S. cents per kWh.
PLN pays about 70 percent of its costs, including the purchase
of fuel, power supplies from private power firms, and spare parts
for its power plants in U.S. dollars, while it sells its power in
rupiah. Thus, any increase in the value of the U.S. dollar will
add to PLN's financial burden, while the rise in the rupiah's
value will cut its costs. The state firm plunged into financial
trouble following the sharp depreciation of the rupiah against
the dollar at the start of the economic crisis in 1997.
The rupiah has strengthened against the U.S. dollar by about 9
percent from 8,900 in the beginning of the year to 8,200 today.
Early this year, the government issued a decree allowing PLN
to increase electricity charges quarterly by an average of six
percent.
The policy was aimed at helping increase PLN's revenue -- so
as to reduce the government's subsidy to the company -- and to
send signals to foreign electricity investors that the government
was committed to making the country's power industry profitable.
Purnomo said the government would still allow PLN to raise its
power charges in the next quarter.
He noted, however, that should the rupiah further strengthen
to above 8,000 per dollar over the rest of the year, power
charges were also likely to reach economic levels by the end of
the year.
"If an economic level is reached in 2003, there will be no
need to raise electricity charges next year," Purnomo said.