Govt undecided about power rate hike

Leony Aurora, The Jakarta Post, Jakarta

Although admitting power generation costs will rise next year as state power firm PT PLN's fuel expenses jump, the government is still dancing around the issue of confirming that electricity rates will be hiked in 2006.

Ministry of Energy and Mineral Resources director general of electricity and energy Yogo Pratomo said that not much gas would replace oil-based fuel in the power generation sector next year, as the infrastructure has yet to be completed.

"The primary power generation costs will not go down," said Yogo after a closed-door meeting with House of Representatives Commission VII on energy and mining on Monday.

"We are still calculating the (cost) increase with the higher prices (applied for) oil-based fuels for PLN," he added.

Starting October, PLN will have to pay market prices instead of the cheaper subsidized prices for oil-based fuel.

PLN's director of primary power generation Ali Herman Ibrahim said on Oct. 2 that due to the new policy, as well as more expensive coal, the company's fuel costs in 2006 would jump by 50 percent to Rp 45 trillion (US$4.45 billion) from Rp 30 trillion to be spent throughout this year.

In pricing forecasts presented earlier this month in front of House members, PLN showed that with a subsidy of Rp 12.98 trillion (US$2.55 billion), the rate per kilowatthour (kWh) would rise by 39 percent from Rp 582 at present to Rp 809.

Another scenario includes revenues with a subsidy of Rp 21.68 trillion, which will warrant a price increase of 29 percent.

A working committee of the House' budget commission has decided that the subsidy to be allocated for PLN in the 2006 state budget will be limited to Rp 17 trillion. PLN received a total subsidy of Rp 12.5 trillion this year.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that the government was waiting to get an official announcement on PLN's subsidy in 2006.

"I have requested PLN to calculate the primary power generation costs," said Purnomo. "If they cannot go down, we have to get a clear figure (on the increase in power charges)."

"We are not in the position to say that there will be a power hike in 2006 yet," he added.

Purnomo went on to say that PLN needed also to consider the different rates applied to the different classes of consumers, including industries, households and government entities.

"The rates applied for I3 and I4 are already quite high," said Purnomo, referring to the medium sized industries with a power capacity of higher than 200 kiloVolt ampere (kVA) and big industries with a capacity higher than 30,000 kVA, respectively.

PLN divides its customers into some 38 classes with different charges. Commission VII has requested the state firm to simplify its rate structure before discussing a hike.

PLN booked another year of net losses in 2004 at Rp 2.02 trillion, but managed to record an operational income of Rp 2.56 trillion, the first time since the monetary crisis in 1997.