House approves Rp 4.1t subsidy for PLN in 2002

Dadan Wijaksana, The Jakarta Post, Jakarta

The House of Representatives budget committee approved on Tuesday a total of Rp 14.25 trillion (US$1.4 billion) in non-fuel subsidies, including a Rp 4.1 trillion electricity subsidy.

The decision was made during the last round of deliberations regarding the 2002 draft state budget. The House is expected to approve the draft budget in a plenary session on Wednesday afternoon.

The government's electricity subsidy will only apply to housing and home industries with electricity capacity under 450 watts.

As part of the policy, state-owned electricity company PLN will raise its power tariff by an average of 6 percent from January 2002.

The approved electricity subsidy is lower than the Rp 4.9 trillion subsidy proposed by the government.

"With the state's financial condition at the moment, I think PLN has no other way but to accept the decision," Minister of Finance Boediono told reporters when asked about the subsidy cut.

Despite the lower subsidy, PLN is still expected to be able to book a net profit of around Rp 500 billion next year.

PLN finance director Parno Isworo, while accepting the reduced level of subsidization, also admitted that the decision might impact on his company's performance.

"It will probably weaken the company's ability in terms of investment, but we just have to live with that," Parno said.

However, Parno assured that his company's policy on public services would not be affected by the reduction.

Tuesday's hearing also saw the budget committee approve a Rp 4.7 trillion subsidy for the State Logistics Agency (Bulog), which is primarily responsible for ensuring the domestic supply of rice at affordable prices, particularly for poor families.

Meanwhile, budget committee chairman Benny Pasaribu said that the House plenary session on the 2002 budget proposal would be held at 1 p.m. Wednesday, just prior to legislators commencing their month-long recess period.

At the plenary session, each House faction will deliver their final views on the state budget draft before officially enacting the bill into law.

There was concern that approval of the budget might be delayed into December after the committee postponed two deadlines.

Failure to complete the debate before the House recess period would cause difficulties for regional administrations drafting their budgets.