Firms' appeal to adjust power rate hike rejected

JAKARTA (JP): The government turned down on Wednesday an appeal from several firms to adjust an electricity rate increase, and told them instead to reschedule their bill payments with state electricity company PT PLN.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government could not accept a proposal for a gradual increase.

Some business organizations have asked the government to adjust the hike by up to 101 percent by September 2002. But they want the rate hike to be limited to 20 percent this year.

"There will be no revision in the 2000 power rates. What can be done is to negotiate the payments with PLN," Purnomo said, following a hearing with House of Representatives Commission V for industry and trade affairs.

Minister of Industry and Trade Luhut Pandjaitan also attended the hearing.

The government decided in April to increase power rates between 53 percent and 76 percent. But the organizations have complained that the decision to hike power rates was too sudden.

Members of the associations said they could not afford the hike because the government also raised fuel prices and the regional minimum wage for workers in the same year.

Most of those complaining were textile firms, which employ a large work force and are PLN's largest consumers.

PLN president Kuntoro Mangkusubroto said PLN would wait until the end of December to see whether the government would accept or dismiss the companies' request for downward revisions of new power rates.

If the government turned down their appeal, he said, PLN would stick to the new power rates and disconnect the power of those refusing to pay them.

Purnomo said a revision in the rate hike would hurt the financially strapped PLN.

He also warned that negotiations on the rescheduling of rate payments should not cause PLN to miss its revenue target.

"A step-by-step payment negotiation can be discussed with PLN, but if it affects the government's subsidies, then this concerns the finance ministry," he told legislators during the hearing.

Purnomo feared that a drop in PLN's expected revenue would require the government to cover the shortfall with another power subsidy, which was budgeted at about Rp 3 trillion (some US$315 million) this year.

PLN data shows that since April, overdue payments have amounted to Rp 600 billion, of which Rp 400 billion is owed by 29 firms.

PLN said it had completed negotiations with 45 companies, with another four yet to settle.

But the state company said five of the 54 companies continued to defy calls for negotiations with PLN.

Luhut warned that the government would get tough on firms who avoided the negotiation table.

He said he would check whether the companies refusing to pay were actually experiencing financial difficulties.

"We will go through each of the company's balance sheets, and if their books show that they were telling the truth, then we will help them, otherwise we'll squash them," he said after the meeting.

PLN marketing and distribution director Eddie Widiono said that of the five firms refusing negotiations, one was a steel company and the other four were textile companies.

Eddie said only companies with pressing financial problems were given the option to negotiate their bill payments.

"But the company must first sign a document in which it acknowledges that it owes money to PLN," Eddie said.

He said PLN would remain consistent and disconnect the power of the five companies if no progress was made by the end of the month. (bkm)