NGOs reject govt power price hike plan

A'an Suryana, The Jakarta Post, Jakarta

A coalition of non governmental organizations (NGOs) urged the government on Friday to drop a plan to raise electricity prices starting in January next year, arguing that the hike would create heavy burdens on the people already suffering from years of economic difficulties.

The NGOs added that an independent team must first be set up to examine the power price hike plan and to decide a more appropriate price increase.

The coalition includes high profile NGOs such as the Indonesian Consumers Foundation (YLKI), the International NGO Forum for Indonesian Development (Infid), and Indonesian Corruption Watch (ICW). They held a press conference to protest the plan.

According to the NGOs, electricity is a public utility as opposed to commercial goods, which means that the government must only charge the public a "reasonable price."

The government is planning to increase the price of electricity by an average of 6 percent each quarter of 2003. The policy is part of the 2001-2004 power price increase plan.

The power price hike plan for 2003 has been approved by the House of Representatives, and it is only awaiting formal approval by the President, before it takes effect on Jan. 1.

The state-owned electricity company PLN has been asking the government for the price hike, because it says its U.S. dollar- based production costs have increased greatly following the 1997 financial crisis, which saw the rupiah plunge in value relative to the dollar.

PLN said that for years it had been forced to sell power at below production costs.

The company can no longer expect the cash-strapped government to fully subsidize the gap because of its limited budget.

Currently, PLN's power is sold for an average of 4.5 U.S cents per kilowatt hour (kWh), compared to its stated production cost of 5 cents per kWh.

The NGO coalition rejected the PLN exchange rate argument, saying that the rupiah has been gradually appreciating against the dollar, so the production cost should no longer be as high as estimated.

"Besides, the company has been unable to improve its service to the public despite the previous power price increases. Electricity blackouts have often occurred in many areas in Indonesia," said an NGO official Muhammad Suhud.

Critics have also said that the problems faced by PLN are mostly due to corruption and inefficiency, and the burden should not be transferred to the public. One example of corruption is the purchase of power from independent power producers at an deliberately marked up price.