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Inflation to rise to 4.6 percent next year on electricity rate hike: BI
Bank Indonesia (BI) says the government’s plan to increase the rate for 900 VA category electricity will cause inflation to rise to 4.6 percent next year.
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People check out generator sets on sale. Generators are often used in households owing to frequent power outages. (kompas.com/Heri Sri Kumoro)
B
ank Indonesia (BI) says the government’s plan to increase the rate for 900 VA category electricity will cause inflation to rise to 4.6 percent next year.
Users of 900 VA electricity will pay Rp 1,400 (US $107 cents) per kilowatt per hour (kwh), more than twice the current subsidized rate of Rp 604 per kwh.
The government argued that from 22.9 million 900 VA customers, only 4.1 million deserved the subsidy.
"If the subsidy is revoked, our inflation will be still below 4 percent in 2017," BI Governor Agus Martowardojo said during a meeting with House of Representatives Commission XI overseeing finance and banking affairs on Wednesday.
The plan to cut the subsidy has a long way to go. A meeting between Commission VII overseeing energy affairs and acting energy and mineral resources minister Luhut Pandjaitan was canceled on Tuesday, as tensions between the government and legislature rose. (bbn)
