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Govt to raise power rates next year
Businesses may have some troubles in their activities next year as the government is mulls electricity tariffs adjusted to the rise and fall of exchange rates and the crude oil price
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usinesses may have some troubles in their activities next year as the government is mulls electricity tariffs adjusted to the rise and fall of exchange rates and the crude oil price.
The Energy and Mineral Resources Ministry's director-general for electricity, Jarman Sudimo, said on Monday that the government would entirely cut electricity subsidies for four categories of power users next year.
'We will wait for the House of Representatives to give the green light to our proposal,' he said in a short text-message.
'Basically, the approach will be just like the non-subsidized 92-octane gasoline, with the pricing [scheme] corresponding to the fluctuation of global oil prices.'
The four categories, which the government plans for electricity tariff increases, are luxury households consuming 6,600 VA; businesses using between 6,600 VA and 200 kilovolt-amperes (kVA); buildings using up to 200 kVA such as malls and government offices; and street illumination rated to use 6,600 VA to 200 kVA.
The government already raised electricity rates for the four groups by an average of 4.3 percent in each quarter of 2013 to reduce ballooning energy subsidies.
The government has revised its allocation for energy subsidies from earlier Rp 80.94 trillion (US$7.3 billion) in the 2013 state budget to about Rp 100 trillion in the revised 2013 state budget.
These categories should no longer enjoy electricity subsidies as of October this year if the government sticks to the 2013 state budget's assumptions that the exchange rate stood at Rp 9,300 per US dollar and the Indonesian Crude Price (ICP) at $100 per barrel.
But the average exchange rate of Rp 9,800 per US dollar and the ICP of $106 per barrel as of August would make the government have to spend subsidies for missing its assumption targets.
In the draft 2014 state budget that the government proposed last week to the House's Commission overseeing energy affairs, electricity subsidies would amount to around Rp 81.97 trillion to Rp 91.1 trillion.
The proposed amount is based on the assumptions of the rupiah exchange rate being Rp 9,600 to Rp 9,800 against the dollar and the ICP $108 per barrel.
In the future scheme, Jarman said the government would ensure the electricity tariffs for the four categories would be released from assumptions in the state budget.
'If the rupiah weakens against the dollar, for example, these categories will have to pay higher electricity bills and vice versa,' he said.
State utility firm PT PLN president director Nur Pamudji said the 'automatic adjustment' scheme, which had been applied to all subscribers between 1994 and 1997, was necessary to 'improve the financial condition of the company'.
Indonesian Employers Association (Apindo) chairman Sofjan Wanandi separately said the organization expected the government to communicate the plan to them ahead of the implementation as it would likely burden businesses next year.
'We, the businesspeople, have experienced a series of price hikes this year that troubled us, so we expect the government to discuss the plan with us first,' he said.
' JP/Amahl S. Azwar
