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Government extends electricity relief to June but halves discounts
The change will reduce electricity relief spending by 50 percent qtq to Rp 2.3 trillion in the April-June period even though the number of recipients has risen by 0.8 percent to 33.9 million over the same period.
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usinesses and small homes in Indonesia are to enjoy another quarter of discounted electricity bills until June but the discounts will be half of those of previous quarters to minimize the burden on state coffers.
Energy and Mineral Resources Ministry Electrification Director General Rida Mulyana said on Tuesday that implementing the relief would cost Rp 2.3 trillion (US$160.7 million) between April and June. The relief would be implemented by state-owned electricity monopoly PLN.
Of the total budget, Rp 1.88 trillion will be spent on discounting the monthly power bills of 32.75 million small homes, businesses and industries while Rp 421.7 billion will be spent on halving monthly electricity subscription fees for 1.24 million businesses.
“With the recovery of the national economy, we’ve decided to give small homes, businesses and industries in the 450 volt ampere [VA] category a 50 percent discount and not a 100 percent discount anymore,” said Rida during a virtual press conference.
Read also: Govt extends electricity discount until March
The government has been giving 100 percent power bill discounts for homes and businesses in the 450VA category, the lowest out of six power-usage categories under existing regulations, since the incentive was launched in early 2020.
Rida said the government would also reduce the discounts for homes in the 900VA subsidized category, the second-lowest category, from 50 percent in previous quarters to 25 percent in April-June period.
Meanwhile, electricity subscription-fee discounts have been cut to 50 percent. These discounts, introduced in late 2020, initially amounted to up to 100 percent.
Extending electricity relief is part of the government’s 2021 national economic recovery (PEN) fund of Rp 699.43 trillion to restore Indonesia’s economy back to pre-pandemic levels this year. The fund also covers vaccinations, cash transfers and tax breaks, among other initiatives.
The economy has shown signs of recovery since last year’s fourth quarter as inflation, the rupiah exchange rate, the Purchasing Managers Index (PMI), exports and imports began rebounding from record lows in the second and third quarters.
PLN customer management director Bob Saril said the company saw domestic electricity demand recover since late last year driven by a resurgence in industrial activity.
“We hope the rise in industrial power demand will continue until the end of this year. Industrial power demand will have a strong domino effect on overall demand, including on household power demand,” he said, also on Tuesday.
Read also: Here’s how 31 million Indonesians will get free or discounted electricity
Bob noted that the government already disbursed Rp 13.15 trillion to PLN to compensate for the electricity discounts given last year. Many observers expressed concern that late payment of such compensation would further strain the monopoly power firm’s cash flow.
Overall, the government expects to reduce its electricity relief spending by 50 percent quarter-on-quarter (qtq) to Rp 2.3 trillion in the April-June period even though the number of recipients rose by 0.8 percent to 33.9 million over the same period.
The government previously announced extending until June its lower electricity tariff scheme for homes above the 900VA Subsidized category and for businesses between the 6,600VA and 200kVA category. The scheme is also meant to stimulate recovery but it will not receive PEN compensation.
