Electricity tariff hikes criticized

Electricity tariff hikes criticized

JAKARTA (JP): Members of the House of Representatives (DPR),
businessmen and economic analysts shared concern that next
month's electricity tariff hikes will hit small-scale subscribers
and consumers of goods.

"I am afraid that the tariff hikes will be used as a reason to
increase prices of consumer goods and industrial products by
market players," Iskandar Mandji, a member of the DPR's
Commission VI, told The Jakarta Post here on Saturday.

He reminded that increases in electricity tariffs are
generally followed by rises in consumer goods and other products.

"I therefore call for the government to improve its control on
market activities to assure the public on the stability of
consumer goods' prices, otherwise the small consumers will be
badly affected," he said.

He also questioned on the government's policy to increase the
electricity billing rates by an average of 7.68 percent.

The tariff for small households with a capacity of between 60
volt amperes (VA) and 200 VA, for example, will increase by 7.52
percent to Rp 71.50 per kilowatt hour (kWh).

On Friday Minister of Mines and Energy I.B. Sudjana announced
that the government has also allowed the state electricity
company PT PLN to make tariff adjustments every three months on
the basis of the impacts of inflation, depreciation of the
rupiah, increases in fuel prices and electricity charges
determined by privately-run power generators.

Sri Bintang Pamungkas, a member of DPR's Budgetary Commission,
said that it was not a good way for the government to burden
small consumers with limited and fixed incomes for the sake of
PLN.

"If PLN needs big investments, it can issue bonds and shares
instead of increasing electricity tariffs," he said, adding that
he preferred to see a higher increase in electricity tariffs for
the industrial sectors due to their good financial capability.

Ignorance

Zumrotin, chairperson of the Indonesian Consumer Protection
Agency, said that the tariff hikes show the government's
ignorance of the conditions of poor consumers.

Mubha Kahar Muang, a member of the Budgetary Commission, said:
"I don't agree that PLN should increase its billing rates for
collecting money to financing its projects. I would say that
PLN's improvement of its efficiency is a better way of collecting
money."

She was quoted by Kompas daily as saying that due to
inefficiency of operation, PLN's losses in the distribution and
transmission activities have thus far reached over 12 percent of
its generation output.

"Our study showed that one percent loss is worth Rp 58 billion
per annum," she said.

She also complained that the calculation of the planned three-
monthly tariff adjustment will be too difficult for the public.
"I am afraid that the complicated calculation will be an
instrument of manipulation and irregularities," she reminded.

Chairman of a major hotel and property business Sahid Group,
Sukamdani S. Gitosardjono, said the increase in electricity
tariffs for industry will unavoidably affect production costs.

"I honestly say that the electricity tariff hikes will have
bad impact on the industry, which will in turn affect buyers," he
said.

Hotel

"On the hotel industry, I estimated that the new electricity
tariffs will raise operational costs by around four to five
percent," he added.

The hotel industry will face an increase in electricity
tariffs by over eight percent. For small-size hotel industry, for
example, with a capacity of between 250 VA and 99 kilovolt
amperes (kVa), the rates will increase to Rp 142.64 per kWh from
Rp 129.89 per kWh.

Yulia Hasan, director of MWM Garment Corp., said that the
electricity tariff rises will extremely hit the textile industry,
whose activities mostly dependent on electricity.

She disagreed with the government, which contended that the
new electricity billing rates are still the lowest in Asia and
the Pacific.

"The problem is that Indonesians' purchasing power is still
relatively low," she added.

President of PT Great River Industries Sunyoto Tanudjaya said
the tariff hikes will increase costs for garment production by
about two percent.

T. Palgunadi, president of PT Astra International, said that
the impact of the tariff hikes on the automotive industry is
small.

"I have a positive opinion on the new tariff policy. The
policy will in fact force the industrial sector to improve
efficiency, which is very important to anticipate fiercer
competition during the new era of economic liberalization," he
argued.(fhp)

Editorial -- Page 4