No plan to raise power prices: Govt

Urip Hudiono, The Jakarta Post, Jakarta

Minister of Energy and Mineral Resources Purnomo Yusgiantoro has said state electricity company PT Perusahaan Listrik Negara (PLN) would not be allowed to increase its rate by up to 7 percent in the near future.

Yusgiantoro said the government would instead look for increased efficiencies from the company to help it save costs.

Fuel prices, which have recently increased, make up 60 percent of PLN's costs, which it predicts will soar by around 30 percent. The company says it faces losses of up to Rp 4 trillion (US$428 million) as a result, forcing it to ask the government to allow higher tariffs within the next six months.

"The government has no plans to raise the electricity rate in the near future," Purnomo said on Sunday. "There is no ministerial team studying such plan nor has PLN submitted any official request to increase its tariff."

Earlier, the ministry's director general of electricity, Yogo Pratomo, said the government might allow PLN to raise its tariff by 7 percent to avoid the firm from suffering further losses from the recent fuel price hike.

Purnomo, however, said the government would ask PLN to improve its efficiencies instead of increasing its rate.

"PLN's inefficiency rate at present stands at a 'two-digit' (added cost of production) level," he said. "We will wait until PLN manages to reduce its inefficiency rate to a one-digit level."

PLN has never made a profit, suffering losses of Rp 3.56 trillion in 2003, following a Rp 6.06 trillion loss the year before. The company's accounts for last year are still being audited.

The government raised fuel prices by an average of 29 percent on March 1 to ease the burden on the state budget from soaring global oil prices, which recently hit the US$50 a barrel mark.

With oil currently accounting of some 60 percent of PLN's fuel usage, any raise in its price would greatly impact on the company's finances.

To avoid this, the government plans in the future to expand the country's existing power plants, including the Paiton coal- fired power plant in East Java.

Purnomo said the government would invite bids for the construction of two new units at the Paiton power plant, to increase its capacity by 800 megawatts from the current 1,320 megawatts.

The open auction will be held after talks between PLN and PT Paiton Energy over the selling price of power to be produced by the new units stalled.