Government to set private electricity price ceiling

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)