Higher electricity tariff base studied

Higher electricity tariff base studied

JAKARTA (JP): The Ministry of Mines and Energy is studying the
possibility of increasing the electricity tariff base following
the rupiah's sharp depreciation against the U.S. dollar, an
official has said.

Director General of Electricity and Energy Development Endro
Utomo Notodisuryo said Friday his office was making the study in
line with the government's plan to raise the electricity tariff
in the next few months.

"We are calculating the increase in the tariff base," he said,
without revealing details.

The International Monetary Fund (IMF) and the government
recently signed a 50-point agreement which among other things
says the government will gradually eliminate subsidies on fuel
and electricity.

The agreement also says the government will start adjusting
fuel and electricity prices starting April 1.

The electricity tariff base, which is stipulated in a
presidential decree, is used as the basis point for an adjustment
in the electricity tariff.

The electricity tariff base is automatically adjusted every
three months according to the country's inflation rate, fuel
price, and the rupiah's exchange rate to the dollar.

An increase in the electricity tariff base will thus enable
state-owned electricity company PLN to increase its tariff
considerably.

The current electricity tariff base was set in 1994 at an
average price of Rp 161.59 per kilowatt hour.

PLN has adjusted the electricity tariff nine times since.

The monetary crisis has severely affected PLN and the company
has complained that the last increase in its tariff was not
enough to compensate for its financial losses from the rupiah's
depreciation.

PLN earns its revenue in rupiah, but pays fuel and maintenance
costs and buys power from independent power producers in dollars.

PLN president Djiteng Marsudi has asked the government to
increase the 1994 electricity tariff base so it could increase
the tariff considerably to compensate for its losses.

PLN has projected Rp 1.3 trillion in losses this year. (jsk)