T

he Energy and Mineral Resources Ministry is proposing that electricity subsidies only be disbursed to a limited number of subscribers who are categorized as impoverished, starting next year.

Under the plan, as stated in the draft of the 2016 state budget, only 24.7 million subscribers will receive subsidies, which should cost around Rp 37.31 trillion (US$2.6 billion). The plan has already been approved by the House of Representatives Commission VII overseeing energy and will be proposed for approval at the budget committee.

'€œThe number of recipients of the subsidy will be based on data from the National Team for the Acceleration of Poverty Alleviation [TNP2K],'€ Energy and Mineral Resources Minister Sudirman Said explained.

The 24.7 million subscribers are customers of state-owned power firm PLN with a 450 to 900 watt capacity installed in their houses. PLN is currently the sole distributor for electricity nationwide.

By capping the number of recipients, the ministry will be able to cut electricity subsidies from the planned level of Rp 67 trillion to Rp 71 trillion next year. In comparison, this year'€™s state budget allocates Rp 66.15 trillion for electricity subsidies.

The Energy and Mineral Resources Ministry'€™s director general for electricity, Jarman, said that the number of recipients could be adjusted if figures provided by TNP2K also changed.

'€œIf the number increases, the subsidy will also be higher. However, the increase may not be a big quantity,'€ Jarman said.

PLN director Murtaqi Syamsuddin said his company would perform a thorough verification of its own figures to match data from TNP2K.

'€œThe new policy will make the subsidy only directed at those who are in need. If the policy is approved, we will establish coordination with TNP2K, which has the database of families living in poverty along with their names and addresses,'€ Murtaqi said.

The growth of electricity demand is estimated to be 7.5 percent next year, a significant increase amid current slowing growth of demand. PLN recently reported that nationwide electricity consumption grew by only 1.78 percent to 98.27 terawatt hours (TWh) in the first six months of the year, far below the government'€™s 7.5 percent growth target.

PLN head of marketing division Benny Marbun said that his company recorded better trends in the third quarter of the year with demand rising higher compared with the previous quarter.

He guessed the increase would be supported by the realization of a number of projects at the regional government level.

However, according to Benny, the increase will unlikely be a significant factor in boosting growth that has slowed in the past few quarters.

'€œBy the year'€™s end, the overall growth will likely be around 3 percent,'€ he said.
________________________________