Government to set private electricity price ceiling

JAKARTA (JP): The government will set the price ceiling for electricity generated by private companies at US$0.06 per kilowatt hour (kWh) in Java to create an efficient energy sector, a senior government official said yesterday.

"We'll set the price ceiling. But it will not be applied permanently. It is adjustable according to economic conditions," the Ministry of Mines and Energy's director general of electricity and new energy development, Zuhal, told reporters after launching the Indonesian electricity magazine.

He said the price ceiling would help the state-owned electricity company PLN improve its own efficiency. The ceiling would also keep the electricity prices down for consumers.

But he said the price ceiling would not be applied to companies that had already signed electricity purchasing agreements with PLN, even though their prices were above the ceiling.

"The already signed agreements will not be reviewed, unless the investors concerned are willing to do so or there are tax incentives that lower the cost of electricity investments," he said.

Zuhal said the price ceiling would not burden private investors because their advanced technology and experience in building power plants would help them minimize their costs.

He acknowledged that PLN had until now bought electricity at prices above US$0.06 per kWh and even above its public selling price of US$0.064.

According to Zuhal, the government would soon issue a master plan on national electricity to protect consumers.

"The master plan will regulate PLN's electricity purchases from private generators and stipulate the kinds of electricity markets that can be managed by private investors," he said. (13)