Periodic increases in electricity cost planned
Periodic increases in electricity cost planned
JAKARTA (JP): There will be no more shocking hikes in
electricity costs in the future. Instead, increases will be
phased in at frequent intervals, an official of the Ministry of
Mines and Energy said yesterday.
Artono Arismunandar, the Director General for Electricity and
New Energy Sources, was quoted by the Antara news agency as
saying that the government is now considering raising electricity
costs periodically, probably every three months.
The issue has already been discussed with the House of
Representatives (DPR) and is now being considered by the
government.
Past electricity cost hikes always led to protests by
consumers -- household users as well as industry -- because they
were imposed every 18 months or two years. Once, the hike even
averaged 20 percent. This approach also caused inflationary
pressures because the hikes were usually followed by increases in
fuel prices, transport fares and eventually to overall costs of
living.
"This is only a proposal to the government. Whether or not it
is endorsed will be decided by a presidential decree," Artono
said.
He explained that the proposal calls for a new formula in
which the prices of electricity are raised automatically every
three months without burdening users excessively.
A maximum 0.05 percent increase every three months is
considered to be reasonable, he said.
The formula takes into account such factors as the costs of
generating electricity, the inflation rate and the rupiah
exchange rate, he added.
If the proposal is endorsed, then the hikes in electricity
prices can be imposed by the state electricity company PLN and no
longer must await a presidential decree as is the current
practice, he added.
The government's plan to hike the electricity prices was
discussed during a closed door meeting on Saturday at the House
of Representatives (DPR) attended by the Minister of Mines and
Energy, PLN President Zuhal and members of the House's Commission
VI which oversees energy, according to the Republika daily
newspaper yesterday.
Efficiency
A number of legislators said in response to the plan that PLN
should first strive to improve its efficiency and look for cost-
saving measures instead of passing on the burden to consumers.
Tadjuddin Noer Said, a member of the House's Budgetary
Commission, was quoted by the Antara news agency as saying that
there must be "greater transparency" in the way the government
manages strategic industry, including the electricity sector.
Tadjuddin said a more open mechanism would allow the House to
exert influence on the way vital services such as electricity are
priced.
The government last raised electricity prices in February 1993
by an average of 13 percent.
The electricity rates are designed in such a way that the
wealthier members of society and the giant users pay more than
the less well to do under the "cross subsidy" system.
The government has also began to allow private firms to build
and operate power plants but reserves the right to fix the prices
charged consumers. (emb)
JAKARTA (JP): There will be no more shocking hikes in
electricity costs in the future. Instead, increases will be
phased in at frequent intervals, an official of the Ministry of
Mines and Energy said yesterday.
Artono Arismunandar, the Director General for Electricity and
New Energy Sources, was quoted by the Antara news agency as
saying that the government is now considering raising electricity
costs periodically, probably every three months.
The issue has already been discussed with the House of
Representatives (DPR) and is now being considered by the
government.
Past electricity cost hikes always led to protests by
consumers -- household users as well as industry -- because they
were imposed every 18 months or two years. Once, the hike even
averaged 20 percent. This approach also caused inflationary
pressures because the hikes were usually followed by increases in
fuel prices, transport fares and eventually to overall costs of
living.
"This is only a proposal to the government. Whether or not it
is endorsed will be decided by a presidential decree," Artono
said.
He explained that the proposal calls for a new formula in
which the prices of electricity are raised automatically every
three months without burdening users excessively.
A maximum 0.05 percent increase every three months is
considered to be reasonable, he said.
The formula takes into account such factors as the costs of
generating electricity, the inflation rate and the rupiah
exchange rate, he added.
If the proposal is endorsed, then the hikes in electricity
prices can be imposed by the state electricity company PLN and no
longer must await a presidential decree as is the current
practice, he added.
The government's plan to hike the electricity prices was
discussed during a closed door meeting on Saturday at the House
of Representatives (DPR) attended by the Minister of Mines and
Energy, PLN President Zuhal and members of the House's Commission
VI which oversees energy, according to the Republika daily
newspaper yesterday.
Efficiency
A number of legislators said in response to the plan that PLN
should first strive to improve its efficiency and look for cost-
saving measures instead of passing on the burden to consumers.
Tadjuddin Noer Said, a member of the House's Budgetary
Commission, was quoted by the Antara news agency as saying that
there must be "greater transparency" in the way the government
manages strategic industry, including the electricity sector.
Tadjuddin said a more open mechanism would allow the House to
exert influence on the way vital services such as electricity are
priced.
The government last raised electricity prices in February 1993
by an average of 13 percent.
The electricity rates are designed in such a way that the
wealthier members of society and the giant users pay more than
the less well to do under the "cross subsidy" system.
The government has also began to allow private firms to build
and operate power plants but reserves the right to fix the prices
charged consumers. (emb)