The Jakarta Post
President Joko “Jokowi” Widodo has announced that Indonesia's poorest households will receive free electricity and discounts to help them cope with the economic shocks caused by the COVID-19 pandemic.
Jokowi said Tuesday that state-owned electricity company PLN would supply free electricity for three months starting April for 24 million households in the 450-volt ampere (VA) category – the lowest out of six categories listed under existing regulations.
PLN will also provide a 50 percent discount for 7 million households in the 900 VA category – the second lowest – for the same three months.
“Public health is our top priority,” Jokowi said in a media telebriefing. “The second priority is preparing social safety net measures for lower income citizens and third is protecting businesses, particularly micro, small and medium enterprises [MSMEs].”
The electricity discounts fall into the social safety net category that includes five other schemes, including increased spending on unemployment benefits and the staple foodstuffs program, after Indonesia announced Rp 405.1 trillion in additional state spending to fight COVID-19.
The move comes after Jokowi declared a public health emergency, which will involve imposing large-scale social restrictions, as stipulated in the Health Quarantine Law. COVID-19 cases in Indonesia reached 1,528 on Tuesday with 136 deaths, the highest death toll in Southeast Asia. The country’s mortality rate, which hovers at around 8 percent, is also among the highest globally.
PLN spokesman Dwi Suryo Abdullah said Tuesday evening that the electricity company was waiting for an Energy and Mineral Resources Ministry regulation that would detail how PLN would execute the discount scheme.
“We are working on the calculations,” he said, “The policy to erase and reduce electricity prices has been coordinated with PLN.”
The consumer electricity discounts are in line with the demands of several civil society organizations, ranging from labor unions to consumer protection groups and think tanks, to protect Indonesia’s poorest families. Electricity bills are one of the top five categories of non-food spending for poor households.
The government is also trying to prevent an exodus of Greater Jakarta’s lower income residents, many of whom are struggling to find work in the virus-ridden capital. Such an exodus risks spreading the virus from Indonesia’s COVID-19 epicenter to other provinces.
However, the demand for cheaper electricity might also burden PLN. Indonesia's largest electricity company is facing financial problems as it expands infrastructure projects, while working to keep electricity prices at a minimum.
“PLN is owned by the government and, under such conditions, this is the least harmful option,” public policy analyst Berly Martawardaya of the Institute for Development of Economics and Finance (INDEF) told The Jakarta Post.
Meanwhile, energy analyst Fabby Tumiwa of the Institute for Essential Services Reform (IESR) told the Post that the discount policy was "quite a good decision under these conditions”.
IESR previously recommended an alternative electricity pricing scheme to mitigate the impacts of the pandemic. The energy think tank urged PLN to make the first 50-kilowatt hour (kWh) of electricity consumed by lower income households free each month. IESR’s recommendation assumes that 450 VA and 900 VA households consume 30-80 kWh and 50-80 kWh of power each month, respectively.
Fabby noted the government should also increase its annual compensation fees to PLN to ensure the electricity company’s financial security. He roughly estimated the policy would cost between Rp 800 billion and Rp 1 trillion each month in additional compensation.
Energy and Mineral Resources Ministry Electrification Director General Rida Mulyana, who is also a PLN commissioner, told reporters two weeks ago that the decision to introduce electricity discounts was in the hands of PLN, not the government.
“The government does regulate electricity prices but if PLN wants to give discounts for a certain time period, then go ahead. Rather than not selling electricity,” he said.