Lawmakers want the government to withdraw PLN tariff hikes

Zakki P. Hakim, The Jakarta Post, Jakarta

Legislators urged the government on Wednesday to push state power firm PT Perusahaan Listrik Negara (PLN) to renege its decision to raise electricity tariffs for manufacturers during peak hours, saying that such a move was illegal.

"PLN has no legal basis to increase the tariffs," House of Representatives Commission VI deputy chairman Irmadi Lubis said after a hearing with the Indonesian Textile Association (API).

After the revocation of Law No. 20/2001 on electricity, the tariffs increase was regulated under Law No. 15/1985, which stipulates that the government, not PLN, has the authority to increase the tariffs, he said.

Starting Sept. 1, PLN will raise the multiplier used between 6 p.m. and 10 p.m. to two from the current figure of between 1.4 and 1.5 for Java, Bali, Sumatra, Kalimantan and Sulawesi, meaning that peak-time electricity will be twice as expensive as that utilized during off-peak times.

The policy will be applied to firms that have power utilization capacities of more than 14 kilovolt amperes (kVA), as well as to government offices, charitable organizations and businesses with capacities of more than 200 kVA.

Commission VI, overseeing industry, trade, investment, small and medium enterprises and state-owned firms, is slated to meet State Minister for State Enterprises Sugiharto on Monday.

Irmadi said the commission would urge Sugiharto to cancel the tariff increase.

API chairman Benny Soetrisno said PLN's decision to increase tariffs combined with the increased raw material due to the soaring oil prices would eventually raise production costs by an average of 25 percent.

"API predicted that at least 300,000 workers would be laid off in the textile industry this year and another 200,000 from its supporting small industries," he said in the hearing.

He said the government's decision to let PLN charge industries, instead of households, made the country less competitive than neighboring countries.

API data shows that the increase would cause power costs for industries to surge from five U.S. cents per kilowatt-hour (kWh) to 6.7 cents/kWh, causing industries in the country to have higher costs compared to others in the region.

As a comparison, the association said, Thailand charged its industries four cents/kWh, Malaysia five cents/kWh, South Korea four cents/kWh and China three cents/kWh.

Separately, industrial economist-turned-legislator Zulkieflimansyah said the House would gladly urge the government to cancel the raise, on the condition that industry players did not lay off thousands of workers if there was no increase.

PLN generates electricity in a sequence, utilizing first hydropower, geothermal energy, gas, coal and, lastly, the more expensive oil if the power produced by other types of power plants proves to be insufficient.

Although gasoline-fired plants contribute only some 30 percent of the country's total power capacity, gasoline accounts for nearly 70 percent of total fuel costs.

PLN has said that it will need 11.44 million kiloliters (kl) of gasoline to generate power this year, higher than its quota of 8.35 million kl of subsidized fuel. State oil and gas firm PT Pertamina has said that PLN may have to pay market prices for the additional supplies.