A top ministry official says he is optimistic that the government’s
proposal to increase electricity rates would be approved by the House of
Representatives despite the deadlock between the two earlier this week.
Deputy Energy and Mineral
Resources Minister Rudi Rubiandini said on Wednesday that he was optimistic
because the policy would not be applied to users such as small households and
small business who used power between 450 to 900 volt-amperes (VA).
“The price increase would only
apply to electricity users with power capacity above 900 VA,” he told a media
meeting at the ministry’s office on Wednesday.
As previously reported, the
government plans to increase the electricity rates between 3 and 4 percent per
quarter next year, or by between 12 and 16 percent by the end of 2013.
The plan is aimed at reducing the
government’s subsidies for private electricity use.
Rudi said further that in
addition to industries, the government would gradually remove electricity
subsidy for households that use electricity above 6,600 VA, malls, big
supermarkets and governmental institutions.
During a House session last
Monday, the government’s proposal on the price adjustment was opposed by
several factions, including the Indonesian Democratic Party of Struggle
(PDI-P). Deliberation of the plan was postponed until next Monday, Sept. 17.
Separately, Finance Minister Agus
Martowardojo said that the rise in the electricity price would have little
effect on inflation in the country.
He said if electricity rates were
increased according to the plan, inflation might only increase by 0.3 percent,
and it would allow the government to increase the amount allocated for capital
spending by an additional Rp 7 trillion (US$731.6 million) to a total of Rp 200
trillion for the 2013 state budget.
Meanwhile, state electricity
company PLN president director Nur Pamudji said that the planned rate increase
was crucial for boosting the company’s investment.
Rudi said that with the increase,
PLN could further improve power infrastructure and increase the country’s rate
of electrification by bringing power to people in remote areas.
Rabby Pramudatama
Business & Investment Opportunities
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