Govt undecided about power rate hike

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.