Electricity firm proposes rate increases between 23% and 59%
Leony Aurora, The Jakarta Post/Jakarta
State power firm PT Perusahaan Listrik Negara (PLN) wants to increase electricity charges by between 23 percent and 59 percent next year, if the government does not increase the subsidy it pays the company for oil-based fuels.
In pricing simulations presented to members of the House of Representatives' Commission VII on energy and mining on Friday, PLN showed that with a subsidy of Rp 25.5 trillion (US$2.55 billion), tariffs per kilowatt hour (kWh) would rise from Rp 582 at present to Rp 716.
The other three scenarios included a subsidy of Rp 21.68 trillion and a hike of 29 percent or a subsidy of Rp 12.98 trillion and a 39 percent price increase. The last option mentioned was a power tariff hike of 59 percent, if the government did not provide any subsidy.
"Based on government's calculations, PLN will need some Rp 38 trillion next year to cover costs (without a tariff hike)," said PLN president director Eddie Widiono after the closed-door meeting.
The House has decided that PLN has to pay market prices for all oil-based fuels it uses starting October.
The power utility cannot raise rates to generate more revenue, as such a decision can only be taken by the government with the approval of the House.
Member of Commission VII Tjatur Sapto Edy said the House would not accept and choose from the scenarios PLN offered until it had time to study the issue.
"The numbers presented were (without details). We will see the detailed calculations (before deciding)," he said after the meeting. "The tariff hike may not be that high."
The commission has requested that PLN provide a detailed report on the planned rises on Oct. 17. "We will scrutinize the costs," said Tjatur, who is also a member of the House's Budgetary Committee.
Next year, PLN would likely receive a subsidy of between Rp 15 trillion and Rp 20 trillion, the maximum the government says the state can afford.
"If it's lower (than Rp 15 trillion), industries won't be able to afford (the power increase)," Tjatur said.
In light of the higher fuel prices, the House raised subsidy allocations for PLN from Rp 4.1 trillion to Rp 12.5 trillion in the second revision of the 2005 state budget.
Starting September, PLN has also raised the multiplying quotient for industries' power usage during peak hours to 2 from as low as 1.4 applied previously, meaning that electricity would be twice as expensive as that utilized in off-peak hours. It also applies a cash penalty for industries that consume more than half of their average usage during peak hours.
The last time PLN raised power rates was in the second semester of 2003, after a series of quarterly hikes by an average of 6 percent starting in early 2002. The government nixed the tariff hike of the last quarter of 2003 amid strong public opposition ahead of last year's general elections.
The company booked another year of net losses in 2004 at Rp 2.02 trillion, but managed to record operational income of Rp 2.56 trillion, the first time since the monetary crisis in 1997 prompted a string of losses.