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Govt ends electricity discounts for small homes
Electricity subsidies for small homes will end at the turn of the month as the government phases out financial relief in response to an improving economy.
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A resident checks the electricity meter at a subsidized apartment building in Bendungan Hilir, West Jakarta, on Aug. 18, 2020. The Energy and Mineral Resources Ministry says electricity subsidies granted for financial relief during the pandemic will end in July. JP/Seto Wardhana (JP/Seto Wardhana)
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iscounts on electricity bills for people living in small homes will end within weeks as the government terminates the financial aid on the grounds that the economic recovery from the pandemic has begun.
The Energy and Mineral Resources Ministry’s electricity director general, Rida Mulyana, said the government had decided to put an end to the program at the end of June, adding that the move had been approved in a meeting with representatives from other departments and the Finance Ministry.
“There will be no more electricity discounts at all starting from the next quarter, “Rida told reporters at virtual press conference held by the ministry on Friday.
The power relief program was rolled out in April 2020 and later extended to December last year, before eventually being prolonged until June 2021. The program is part of the COVID-19 stimulus package aimed at sustaining household spending and accelerating the economic recovery.
From April through December, the program consumed almost Rp11.8 trillion of the stimulus budget. It gave households with 450-VA connections free electricity, while people living in subsidized homes with 900-VA connections received a 50 percent discount. The discounts were cut by half with the final extension of the program for the second quarter of 2021.
The decision is based on the government’s assumption that the economic recovery has begun and that economic stimulus and financial relief can therefore be scaled back.
The government has projected year-on-year (yoy) economic growth of 6 to 7 percent for the second quarter, which would mark a strong improvement over a contraction of 0.74 percent yoy in the first quarter.
Finance Minister Sri Mulyani had signaled back in January that stimulus measures would end as economic activity picks up. During a meeting with the House of Representatives, Sri Mulyani said: “If the economy grows again, any government relief will be pulled back”.
