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Electricity subsidy budget to increase
The Energy and Mineral Resources Ministry plans to propose a Rp 1
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span>The Energy and Mineral Resources Ministry plans to propose a Rp 1.7 trillion (US$127.64 million) increase for electricity subsidies in the 2017 revised state budget.
The government will direct the funds to cover an additional 2.44 million consumers who were recently found to be eligible for the 900-volt-ampere (VA) subsidized electricity tariff.
The ministry previously cut down on the number of electricity subsidy recipients to 4.1 million people from 22.8 million. However, its electricity directorate general and state-owned electricity firm PLN have verified that 2.44 million subscribers are eligible for the subsidy.
“This is why we will propose an additional Rp 1.7 trillion to cover these additional consumers in our presentation for the 2017 revised state budget to [the House of Representatives’] Commission VII,” Energy and Mineral Resources Minister Ignasius Jonan told reporters on Wednesday.
If the House approves the additional funds, the government will have Rp 50.4 trillion in its electricity subsidy budget, which includes the funds needed to cover 900 VA and 450 VA subscribers.
Jonan argued that if the government had not slashed its list of subsidized electricity subscribers, the budget would have ballooned to Rp 67 trillion.
The Energy Law stipulates that the central government and regional administrations must allocate subsidized electricity to low-income households. Aside from 900 VA subscribers, the subsidy also goes to 22.8 million households of 450 VA electricity capacity.
The government has long planned to downsize the number of subsidized subscribers, but the move was postponed until the ministry, the PLN and the National Team for the Acceleration of Poverty Reduction (TNP2K) completed a survey to verify existing subscription data.
The ministry’s proposal for next year’s electricity subsidy budget is even higher at between Rp 52.66 trillion and Rp 56.77 trillion, in part due to a compromise between the government and the House not to write off subscribers of subsidized 450 VA electricity.
Jonan reaffirmed that all electricity tariffs would not rise until the end of the year, in accordance with President Joko “Jokowi” Widodo’s order to maintain affordable electricity rates.
The government also predicts that energy prices from coal and gas sources will decrease and lead to even lower electricity tariffs.
Electricity tariffs will remain the same as those set in the April-June period, with low-voltage households in the 1,300 VA category paying Rp 1,467.3 per kWh.
Non-subsidized 900-watt consumers will pay an average of Rp 185,000 per kWh each month.
In terms of efficiency, PLN cut its electricity supply costs (BPP) last year to Rp 1,265 per kWh from Rp 1,300 in 2015, its lowest rate since 2011. The firm also cut fuel costs to Rp 22.8 trillion in 2016 from Rp 35 trillion in 2015.
Meanwhile, Institute for Essential Services Reform (IESR) executive director Fabby Tumiwa urged the government to be clearer in how it calculated its subsidies budget for subsidies as the current figure is too high.
“The government needs to be transparent in how it calculates economic tariffs and PLN’s permissible margins, as this will determine subsidies for households using 450 VA and 900 VA electricity,” he told the Post.
