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July 1 electricity hike to save state Rp 3.09t
The planned electricity hike would reduce budget spending by Rp 3.09 trillion (US$210 million) with minimal impact on inflation, the government announced on Monday.
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Blue sky is seen above the usually polluted Jakarta on July 2, 2021. Electricity prices will rise in particular for people in upper-class housing, the government announced on Monday. (AFP/BAY ISMOYO)
T
he government is planning to hike electricity rates for some residential customers and public institutions to alleviate the burden on the state budget, in a bid to keep domestic energy affordable as global energy prices skyrocket.
The Energy and Mineral Resources Ministry told a press conference on Monday that the targeted energy hike would save the state Rp 3.09 trillion (US$210 million) in compensation for energy companies.
The ministry said it would adjust the electricity rates for five customer categories against the real costs to maintain fiscal consolidation amid rising inflation and cost of funds.
Statistics Indonesia (BPS) data show that inflation reached 3.55 percent year-on-year (yoy) in May, the highest inflation recorded since December 2017, as oil and natural gas prices respectively increased 64.28 and 350.61 percent yoy.
"There needs to be an adjustment of the burden-sharing scheme and a correction of the government assistance that was [mistakenly] given to parties who enjoyed it previously. Thus, we are correcting the current conditions so it is more targeted and equitable," Rida Mulyana, the ministry’s electricity director general, told reporters.
Read also: Power prices for large houses set to rise on July 1
An electricity hike of 17.64 percent applies to customers in the R2 (medium residential load) category of between 3,500 and 5,500 volt-amperes (VA) as well as customers in the R3 (high residential load) category of 6,500 VA and above. These categories primarily apply to customers in the higher income bracket.
