PLN hopes not to raise rates due to strong rupiah
PLN hopes not to raise rates due to strong rupiah
M. Taufiqurrahman, The Jakarta Post, Jakarta
State electricity company PT PLN said if the positive trend of
the rupiah's value against the U.S. dollar stayed consistent
through December, another increase in electricity charges would
likely be called off.
PLN president Eddie Widiono asserted on Wednesday that
stability in electricity charges was possible given the fact that
70 percent of the company's electricity generation costs were
pegged to the U.S. dollar.
"Therefore, if the U.S. currency is down by 10 percent, we
assume the costs of generation will drop by 7 percent," Eddie
told reporters after a hearing with the House of Representatives
Commission VIII.
He said that the current charge of Rp 540 (63 U.S. cents) per
kilowatt hour (kWh) was still below the break-even level of Rp
630. By the end of this year, PLN originally planned to raise the
charge to Rp 620 per kWh.
PLN was given permission by the government to raise its
electricity charges in each quarter starting in 2001 with the aim
of eliminating subsidies and making a profit by 2005.
Earlier, Director General of Electricity and Energy
Utilization at the Ministry of Energy and Mineral Resources Luluk
Sumiarso said that as a result of the weakening of the dollar
against the local currency, electricity charges were expected to
decline.
Eddie said in the beginning of 2004 the charges would reach an
average of Rp 630 per kWh, and if the rupiah stood at Rp 8,000
per U.S. dollar, the price would likely be made up by the value
of the rupiah.
"By that time, there would be no need for us to raise the
electricity charges," he said.
Despite the promising future, Eddie said that for the current
period there was no way to change the plan for increasing
electricity charges because the company was still struggling to
escape financial problems.
"So ... for now, there is nothing we can do as we still are
suffering from losses," he said.
However, the PLN executive warned that the strengthening of
the rupiah would be helpful only if it was accompanied by the
stability of fuel prices.
"The dollar may be down, but we have to be cautious about the
trend in oil prices," he said, adding that if PLN utilized oil as
the main fuel for its power plants, the company might have to
spend up to Rp 22 trillion for electricity generation.
Currently, PLN is having problems finding alternative fuel for
its plants across the country. For instance, the company is
experiencing difficulties procuring the less-expensive natural
gas, given the lack of infrastructure to transport it.
"If the price of fuel also declines, there will be no need to
hike the electricity charges," he said.