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Govt revises new electricity prices
In response to complaints by industrial firms, the government is revising details of its new electricity prices to ensure it fulfills its promise of not increasing rates for industries by more than 10 percent on average
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n response to complaints by industrial firms, the government is revising details of its new electricity prices to ensure it fulfills its promise of not increasing rates for industries by more than 10 percent on average.
Coordinating Economic Minister Hatta Rajasa said Friday that the government was recalculating the new prices.
“In principle, the current electricity price hikes have been jointly discussed by the government and the House of Representatives, resulting in a decision to increase [prices] by 10 percent on average,” he told a press conference.
However, he said, the electricity prices recently announced by the government should increase by between 10 and 15 percent in July for industries so that prices for customers with far lower electricity needs, 450 watts — 900 watts, would not have to be increased too.
He said the increases had exceeded 10 percent on average because of two temporary additional surcharges for industrial customers Multiguna and Dayamax.
“We have to recalculate the new rates,” he said. “We will keep to the decision agreed to with the House — an average 10 percent increase.”
He said electricity prices would have to be increased as mandated by a law agreed to by the government and the House.
“We are sure the price hikes will be more realistic and Indonesian products will remain competitive even after the price hikes,” he said.
The Energy and Mineral Resources Ministry said that 40 percent of industrial firms, including micro, small and medium enterprises, had not been affected by the price increases.
Energy and Mineral Resources Minister Darwin Zahedy Saleh said that about 37 million of the total 40 million customers of state electricity company PT PLN were households.
“About 32 million customers from the household category aren’t affected by the electricity price hikes,” he was quoted as saying by Bisnis.com.
He said that 60 percent of the firm’s 3 million industrial clients were affected by the increases.
“About 40 percent of industrial and business customers aren’t affected by the price increases. This means that only 60 percent of customers from that segment are affected by the price hike,” he said, adding that small and medium enterprises consumed between 450 and 900 watts of electricity.
Darwin said the price increases could support the government’s effort to supply electricity to about 19 million new households.
However, he said, his ministry was still discussing the prices because many customers, especially from the industrial sector, had complained that they were having to pay 10 to 17 percent higher prices.
“We will try to find the best solution so that they won’t be affected by excessive increases,” he said.
Earlier, several employer groups said the price increases might hamper their competitiveness, stagnate investment growth and force mass layoffs.
The chairman of the Indonesian Textile Association, Ade Sudradjat, told The Jakarta Post recently that current electricity rates for textile companies, which were 40 percent higher, might increase textile production costs by between 10 and 15 percent.
Responding to this concern, Hatta said the new electricity prices would not prompt mass layoffs.
“[The numbers] are exaggerated because [spending on] electricity contributes only 5 percent to total production costs,” he said.
“With a price hike of between 10 and 15 percent, total production costs would increase by very little, less than 1 percent,” he added. (ebf)
