Govt might cancel October electricity hike

Govt might cancel October electricity hike

Evi Mariani, The Jakarta Post, Jakarta

The government might cancel the quarterly electricity rate
increase in October in a bid to help create political stability
ahead of next year's general election.

"We also might not increase electricity rates next year,"
Minister of Energy and Mineral Resources Purnomo Yusgiantoro told
lawmakers during a hearing on Thursday with House of
Representatives Commission VIII for energy.

Purnomo hoped the rupiah would stabilize at between Rp 8,200
and Rp 8,300 per U.S. dollar to allow the government to take this
option.

The rupiah has averaged 8,300 to the dollar over the past
several months. Late Thursday it was Rp 8,465 to the dollar.

Purnomo said there were three options open to the government.

First, the government could increase power rates next month as
planned. Second, it could choose not to raise power rates, and
third, it could increase power prices only for certain categories
of customers.

The ministry's Director General of Electricity and Energy
Utilization Luluk Sumiarso said the government would make a
decision latter this month.

Previously on Tuesday, House Commission VIII urged state
electricity company PLN in a hearing to "review the rate increase
policy", saying current rates were already too high.

PLN Eddie Widiono insisted that power rates would be increased
in October, but promised to delay next year's hike if the
government so requested due to political stability concerns
during the general election.

PLN has been raising power rates by 6 percent each quarter
since the beginning of 2002, as permitted as per presidential
decree. Despite widespread protest in January this year, the
quarterly price hike was not canceled, although the government
was forced to cancel its plan to increase fuel prices.

Strapped for cash, the PLN has said it would continue to raise
power rates until after 2005, when the rates are expected to
reach 7 U.S. cents per kilowatt hour (kwh), reasoning the 7-cent
level is the standard price in many countries for a power company
to gain a profit.

According to PLN, the average power rate now stands at Rp
585.17 or 6.88 cents per kWh. Should PLN and the government
increase power rates in October, the average price would reach Rp
610.62, or 7.18 cents per kWh.