State-owned electricity firm PT PLN reported slower growth in electricity sales as big-scale industries tighten power consumption due to electricity rate hikes
State-owned electricity firm PT PLN reported slower growth in electricity sales as big-scale industries tighten power consumption due to electricity rate hikes.
PLN sold 95.6 terrawatt hours (TWh) of electricity during the January to June period 2014 nationwide, an increase of 6.71 percent compared to the same period in 2013. The increase, however, is lower compared to the 7.17 percent increase during the January-June period 2013 from the same period in the previous year.
PLN commercial division head Benny Marbun said the slower growth was particularly due to higher electricity rates.
'It's likely big scale industry took efficiency measures following the increase in electricity prices,' Benny said on Tuesday.
According to him, electricity consumption among big scale industry only rose 3.6 percent during the period of January to June 2014 compared to the same period in 2013. Big scale industry electricity consumption grew 8.3 percent in the first half of 2013 compared to the first half of 2012.
The state electricity company had targeted to see big scale industry's power consumption increase by 7 percent, according to Benny.
The government decided to hike electricity rates to cut subsidies assigned to the sector, which are a burden on the state budget.
Starting in May, the government imposed a bimonthly increase on two big industry groups. The I3 group ' companies using more than 200 Kilovolt ampere (kVA) that are listed on the stock exchange ' will see electricity prices rise by a total 38.9 percent by the year end. Meanwhile, the I4 group ' that use 30,000 kVA ' will bear a 64.7 percent increase by the year end.
Also starting in July, the government increased electricity rates for six customer groups, including individual users and industry players. The increases range from 5 percent to 11 percent every two months until the end of the year. This increase was estimated to save Rp 8.51 trillion (US$725 million) of the state budget.
The Energy and Mineral Resources Ministry's director general for electricity, Jarman, said earlier that apart from saving money, the increase would strengthen PLN's cash flow so it could invest in more development projects.
'PLN's [business] sustainability will be stronger as its subsidy dependency decreases,' Jarman said.
However, the increases would likely put more pressure on PLN in the near future.
Benny said PLN estimated further pressure due to the rate increases.
However, the company maintains its electricity sales target of 198.5 TWh by the year end, or around 7 percent increase compared to last year.
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