NGO backs decision on power rates
Fitri Wulandari, The Jakarta Post, Jakarta
A non-governmental organization praised on Friday the government's decision not to increase power rates this year, dismissing worries that the measure would make the country unattractive to power investors.
The Working Group on Power Sector Restructuring (WGPSR) said, at current rates, state power firm PT Perusahaan Listrik Negara (PT PLN) would still be able to earn a handsome profit and the country would remain attractive to power investors.
"The present rates do not only allow PLN to cover its production costs but also to accumulate profit for investment in the future," WGPSR's coordinator Fabby Tumiwa told The Jakarta Post on Friday.
PLN's current power rate is Rp 574 or 6.79 U.S cents per kilowatt-hour (kWh), while PLN's production costs range from 5.5 cents to 6 cents.
The government has decided not to increase power rates for the whole year in spite of the existence of Presidential Decree No. 89/2002, which permits PLN to raise its rates each quarter, from early 2002 to 2005, until the rate reaches 7 cents per kWh -- a level that PLN claims as "profitable".
Citing the WGPSR study, Fabby said PLN now had Rp 6 trillion in depreciation funds, which it could use to upgrade its old power plants. Under the current tariff, PLN would also earn total revenue of Rp 65 trillion to Rp 70 trillion this year.
PLN needs around Rp 10 trillion to build complete power infrastructure, including power plants and a transmission and distribution network.
"PLN could also seek loans," Fabby said.
Earlier, Yogo Pratomo, director general of electricity and energy utility at the Ministry of Energy and Mineral Resources, who is also a PLN commissioner, said PLN had spent Rp 15 trillion last year and expected to spend a similar amount on investment this year.
Fabby said should the rupiah hold stronger against the U.S. dollar this year, PLN would cut much of its costs and as such get more funds for investment to improve the quality of its services.
"So far, PLN still has to prove to consumers that its services are reliable," he said.
With regard to foreign investors, Fabby believed the new power rate policy would not scare away investors as the current price was already profitable for them.
Investors cared more about contractual certainty and the investment climate, he said.
"They want to see if PLN would buy the electricity they produced. They would also want to assess if investment risks in Indonesia were still high," Fabby said, adding that most investors believed that investment risks in Indonesia had decreased, given macroeconomic stability and a stronger rupiah.