PT PLN seeking govt approval for rate increase
PT PLN seeking govt approval for rate increase
JAKARTA (JP): State electricity company PT PLN is seeking
government approval for an increase in power rates of between 2
percent and 3 percent, starting in January next year.
PLN president Kuntoro Mangkusubroro said on Wednesday that the
increase would apply to low-income household consumers, who were
excluded from the last increase.
In April the government raised electricity prices by an
average of 29.43 percent for household, business and industrial
consumers.
Low-income households with a consumption of less than 900
kilowatt per hour -- constituting about 86 percent of PLN's
customers, or 24 million households -- were exempt from the
price hike.
Raising power rates, Kuntoro said, would help bridge the
deficit of PLN's production costs and its electricity selling
price.
"The subsidy from the government totals Rp 3.9 trillion, this
means that we are selling power below its production cost,"
Kuntoro told reporters after a hearing with House of
Representatives Commission VIII for energy affairs.
The state company buys electricity from independent power
producers at an average of 6 U.S. cents (about Rp 680 at the
current exchange rate) per kilowatt per hour (kWh), much higher
than its average selling price of Rp 240 per kWh.
"One way to reduce our losses is to raise prices," Kuntoro
said.
Reducing subsidy spending was part of an agreement with the
International Monetary Fund (IMF), which is providing the country
with a US$5 billion aid package under a three-year economic
program.
House member Irwan Prayitno said that any further price hike
must first undergo House evaluation.
"First we evaluate the current situation and see whether the
public is ready for a price hike, then we'll discuss the amount
and the timing," Irwan said.
However, Irwan estimated that there was an equal chance of the
proposal being approved.
"While the public seems unprepared, PLN can no longer afford
to lose more money," he explained.
Malaysia
Meanwhile Indonesian Mineral Resources and Energy Minister
Purnomo Yusgiantoro said that Indonesia had offered to sell
electricity to Malaysia through a 170-km-long underwater cable
network from Riau to Johor, Malaysia,
Purnomo said Indonesian President Abdurrahman Wahid raised the
proposal with Malaysian Prime Minister Mahathir Mohamad during
their meeting in Langkawi on Tuesday.
"Dr. Mahathir said he would consider the matter," Purnomo was
quoted by AFX Asia as saying.
Riau has sizable coal deposits, and Indonesia is willing to
set up a coal-powered power station in Riau to supply electricity
to Malaysia, he said.
The area could produce some 5,000 MW of electricity, Purnomo
said.
PLN president Kuntoro said that such a project would be
economically viable.
"It's possible, because we have a project in Riau that we've
been thinking of for quite some time, it's the Cirenti project,"
he told reporters in Jakarta.
He said that Cirenti had enough coal to make the development
of a power plant feasible.
By using an underwater cable, he said, Indonesia could sell
electricity to Malaysia.
"We've been thinking about developing the Cirenti project for
about 10 years," he added.
Kuntoro could not estimate the project cost, but added that it
would have to involve independent power producers, as PLN was
unable to commit for large investments.
PLN is one of the worst performing state companies with losses
soaring to Rp 11.58 trillion (US$1.3 billion) in the first
semester of this year.
Kuntoro further assured that selling power to Malaysia under
the Cirenti project would not hurt domestic power supplies.
He said that power demand in Riau would be unable to absorb
Cirenti's capacity, so some could be sold to Malaysia. (bkm)