Legislator rejects power price hike

Legislator rejects power price hike

The Jakarta Post, Jakarta

A House of Representatives commission rejected on Thursday the
government's proposal to raise electricity charges for households
by 14.5 percent every three months next year, saying such hikes
would be inordinately burdensome for the public.

Commission VIII for energy and mineral resources, the
environment, and science and technology, during a hearing with
the state electricity company and Minister of Energy and Mineral
Resources Purnomo Yusgiantoro only approved the government's
budget proposal for the allocation of Rp 4.1 trillion in
electricity subsidies next year.

"These increases (in electricity charges) are too much. Most
of the public can't afford them, particularly given the fact that
the government also plans to significantly raise fuel prices next
year," commission deputy head Emir Moeis was quoted by Antara as
saying during the hearing.

This year, the government has allocated Rp 4.1 trillion to
fund power subsidies -- similar to the planned subsidy for next
year.

During the hearing, Purnomo proposed that power charges be
raised by an average of six percent during each quarter of next
year.

The charge hike for low income households and charitable
institutions was proposed at 14.5 percent given the fact that the
charges being applied to these types of customers were much lower
than PLN's production costs.

PLN has been in financial difficulties for years due to the
economic crisis, which was marked by a sharp depreciation in the
value of the rupiah against the dollar.

The state company, which sells its power in rupiah and pays
most of its costs in dollars, has for years been forced to sell
its power for less than its production costs. As such, it needs
to be subsidized by the government.

Today, its power price averages 4.5 US cents per kilowatt hour
(kWh), compared to its production cost of 5 cents per kWh.

During the hearing, the commission and the government agreed
to set up a small committee to further discuss the details of the
charge hikes.

Also during the hearing, the commission agreed to raise the
price of kerosene for household consumers to Rp 700 per liter "at
the maximum" next year from Rp 600 at present. The government had
proposed a new price of between Rp 700 and Rp 750 per liter.

On Wednesday, Purnomo told the commission that the government
planned to remove all subsidies from all fuel products, except
for kerosene, next year.

The subsidy for kerosene would be removed in 2004.

Purnomo said the plan would cut subsidy spending next year to
Rp 15.87 trillion (about $1.74 billion), 52 percent less than
this year's spending of Rp 30.5 trillion.

The plan would raise the maximum price of gasoline sold in gas
stations from the current 75 percent to 100 percent of the
international market price.

Legislator Priyo Budi Santoso, who is a member of Commission
VIII as well as the House budget committee, said that the House
might approve the plan as the House, the government and the
International Monetary Fund (IMF) had agreed to totally remove
fuel subsidies by 2004.

However, he said, the budget committee was still discussing
the details of the new pricing scheme with the government.

"We are currently involved in a serious debate about the new
prices.

"We don't want the gasoline sold in fuel stations here to cost
as much as in Singapore gas stations as the price in Singapore is
too expensive," Priyo told The Jakarta Post.