House, govt agree on average 29.43% hike in power rates
House, govt agree on average 29.43% hike in power rates
JAKARTA (JP): The government reached agreement on Friday with
the House of Representatives' special team on electricity rates
to propose an average rate increase of 29.43 percent starting
April 1.
Legislator Pramono Anung, who led the team, said they also
agreed to protect low-income households with maximum electricity
feed of 900 kilowatts per hour.
"We're still discussing the 29 percent rate hike, but 90
percent of us have agreed on that," Pramono said at his office.
The increase is below the 35 percent proposed by the
government. The coverage of the subsidy is also expansion from
the government's initial proposal to cover only households
consuming a maximum of 450 kWh.
Pramono said by increasing the range of the subsidy, the
government would protect 86 percent of PLN's customers, totaling
some 24 million households.
Under the team's proposal, the electricity rate for households
with 1,300 kWh would rise 33.28 percent, and households with
2,200kWh would face an increase of 38.41 percent.
Rates for businesses with 1,300kWh and 2,200kWh would be
increased 26.88 percent and 33.98 percent respectively.
Industrial consumers would face the highest rate jump, ranging
from 53.72 percent to 76.19 percent.
Despite the electricity rate increase, Pramono said
electricity company PLN would still suffer about Rp 3.9 trillion
(US$540 million) in losses.
He said the House team and the government also agreed to
extend Rp 3.9 trillion in electricity subsidies to PLN to cover
its losses.
Of the total allocated electricity subsidy, Rp 2.1 trillion
will be used to subsidize household electricity rates and Rp 1.8
trillion to finance PLN's new investment in infrastructure for
new customers.
The government agreed with the International Monetary Fund to
progressively lift subsidies on electricity and fuel in the 2000
budget year that runs from April 1 through Dec. 31.
Pramono said to reduce the level of electricity subsidies in
the future, PLN needed to follow efficiency measures recommended
in an audit by Arthur Andersen.
The audit found PLN could have saved Rp 1.12 trillion per
annum through more efficient running of the company.
Pramono said PLN would be able to save Rp 200 billion in
maintenance costs if it followed Arthur Andersen's
recommendations.
If PLN managed to lower prices of gas it used to operate its
power plants, Pramono said, PLN would be able to save Rp 454
billion.
Aside from the electricity subsidy, Pramono said the House
team asked the government not to raise prices of diesel solar
energy. If the government retains the current prices of diesel
solar, he said PLN would be able to save Rp 740 billion.
Based on the team's calculation, the government must provide
an additional Rp 660 billion to include 900kWh consumers under
the subsidy program.
"By not increasing prices of diesel solar, the government
could subsidy consumers of up to 900kWh," he said.
Pramono added the proposal would depend on the assumed oil
prices in the 2000 budget, in which the government previously
assumed oil prices would average $18.
"We proposed to raise the oil price assumption from $18 to $20
for which we expect an additional revenue of Rp 2.6 trillion," he
said.
The additional revenue would be enough to finance the subsidy
on diesel solar and kerosene.
Pramono said the increase in the assumed oil prices had
already been approved by the House's budget committee.
The team plans to complete its recommendations on rate
increases on Monday. (03)