Consumers of electricity may be in for a nasty surprise as state-owned electricity company PT Perusahaan Listrik Negara (PLN) is mulling an increase in electricity rates, following lawmakers’ rejection of the government’s request for higher subsidies.

PLN is in a tight spot, as claimed by its president director Sofyan Basir. The former banker said on Thursday evening that it might be forced to jack up electricity rates for 900-watt subscribers to lighten its financial burden.

“If lawmakers do not grant the [additional] subsidy, we must raise rates. I am sure that the government will understand because our intention is to give subsidized electricity to those who really deserve it,” he said.

Earlier that day, the House of Representatives turned down the government’s request to raise the electricity subsidy in the 2016 state budget revision draft to Rp 57.2 trillion (US$4.27 billion) from an initial Rp 38.39 trillion.

The House’s budgetary committee vice chairman Said Abdullah argued that the subsidy allocation must remain unchanged to prevent a wider budget deficit. According to the budget revision draft, the deficit is estimated at 2.48 percent of gross domestic product (GDP), or Rp 313 trillion.

The decision was made even though the government has postponed its plan to remove 17.9 million subscribers from the pool of 22 million that access the subsidized 900-watt electricity program.

The government has previously said that those 18 million subscribers do not qualify for the subsidy because their economic status is higher than those the subsidy is meant to target. Sofyan claimed that the firm did not have sufficient funds to cover subsidies for all 22 million subscribers.

The electricity rates for 900-watt subscribers are currently set at Rp 585 per kilowatt hour (kWh), compared to Rp 1,364 per kWh for non-subsidized low-voltage households, including those receiving 1,300-watt capacity.

PLN will meet with the Energy and Mineral Resources Ministry to discuss a solution next week, Sofyan said.

The Energy Law stipulates that the central government and regional administrations must allocate electricity subsidies to poor households. The current electricity subsidy program receives 40 percent less funding than it did in 2015, when it received Rp 66.1 trillion.

Aside from the 900-watt subscribers, the subsidy also goes to 2.7 million subscribers with 450-watt electricity capacity.

However, the subsidy’s distribution has long been questioned. In November last year, President Joko “Jokowi” Widodo instructed the Energy and Mineral Resources Ministry to verify the status of electricity subsidy recipients to determine whether or not a rate increase was feasible.

The six-month survey — conducted jointly by the ministry, PLN and the National Team for the Acceleration of Poverty Reduction (TNP2K) — revealed that only 4.1 million of the registered 22 million 900-watt subscribers qualified for the subsidy.

The ministry said it would start taking action against the ineligible recipients, but it never followed through with the plan.

The Energy and Mineral Resources Ministry’s director general for electricity, Jarman, claimed that it was currently comparing the survey results to data from the Central Statistics Agency (BPS).

“We have to match up the data on eligible recipients. That’s why we postponed revoking subsidies,” he said.

Meanwhile, PLN finance director Sarwono Sudarto said that the company was still using the current subsidy allocation of Rp 38.39 trillion and would follow the government’s final decision, no matter the result.

If the decision is to maintain the current amount of subsidy funding, PLN will have to increase its efficiency programs, Sarwono said. The biggest efficiency measure should be on energy. We managed to save up Rp 42 trillion through various measures last year,” he added.

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