Hike in tariff will help rural people: Minister
JAKARTA (JP): Minister of Mines and Energy I.B. Sudjana yesterday defended the government's decision to hike electricity tariffs beginning next month, saying that it will help accelerate electrification for the majority of the country's population.
"Many people may have forgotten that around 60 percent of our population, who live in rural areas, have not been reached by electricity," Sudjana said during a three-day workshop on energy at the Agency for the Technology Assessment and Application (BPPT).
He contended that the planned increase in electricity billing rates will enable the state electricity company PT PLN to collect funds to finance its electrification program.
"I am deeply concerned over recent comments raised by economic analysts who criticized the government on its new policy of the tariff hikes, which they labeled as unfavorable to small-scale subscribers," he said.
The government last week announced an average increase of 7.8 percent in electricity billing rates effective next month.
The government has also allowed PLN to make tariff adjustments every three months on the basis of the impacts of inflation, depreciation of the rupiah, increases in fuel prices and electricity charges determined by privately-run power generators.
Under the new policy, small households with a capacity of between 60 volt amperes (VA) and 200 VA will pay Rp 71.70 per kilowatt hour (kWh), reflecting an increase of 7.52 percent from Rp 66.50 per kWh currently.
Sudjana argued yesterday that under the new tariff arrangement, small-scale subscribers will pay a lower rate for electricity.
He added that large-scale subscribers will be burdened with the cross-subsidy program for helping small subscribers tackle the remaining part of the unabsorbed tariffs.
"It is not true that the government has given special treatment to large-scale subscribers, which are usually from the industry sector," he said.
Demand
He contended that the increase in the electricity billing rates was also urgent, considering that the demand for the electricity in the country is sharply growing. "The growth rate of our electricity demand is the highest in the world," he said.
He said the country's demand increases by over 15 percent per year.
Indonesia, therefore, plans to establish new generation plants with a total capacity of 13,000 megawatts (MW), of which plants with a combined capacity of 9,500 MW will be constructed by PLN alone and the remaining 3,500 MW by the private sector, he said.
PLN needs around Rp 12 trillion per annum for its own power projects, he added.
Sudjana called it groundless to say that the planned electricity hikes will hinder our industry's competitiveness on the international market.
"If there is a problem in the industry, I would say that the problem is caused by its own inefficiency, not by the electricity tariff hikes," he said.
Sudjana acknowledged that PLN should improve its efficiency. "But, I have seen that PLN made its best efforts to reduce its losses from 20 percent in 1985 to 12 percent in 1993," he added.
PLN's president, Zuhal, said that the proceedings of the tariff increase will not be used to strengthen PLN's financial structure but to finance electrification projects throughout the country.(fhp)