Kadin Chairman Supports Plan to Raise Indonesia’s Electricity Tariff in 2013

By webadmin on 08:30 pm Sep 20, 2012
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Tito Summa Siahaan

While industry players voiced their concerns over the possible implications of the government’s plan to raise the electricity tariff, the chairman of the Indonesian Chamber of Commerce and Industry, Suryo Bambang Sulistyo, threw his support behind the plan on Wednesday, saying it would be good for the country.

The House of Representatives on Monday approved the plan to raise the electricity tariff by 15 percent next year, while giving an exemption for households consuming less than 900 volt-amperes.

The Indonesian Employers Association (Apindo) considered the new rate too high and instead proposed a maximum 10 percent increase. Its chairman, Sofjan Wanandi, even went as far as saying that businesses may end up “reducing jobs.”

Suryo, however, claimed that business owners do understand the need to raise the electricity tariff. “From the beginning, Kadin has seen that the [energy] subsidy has put a strain on the state budget,” he said, referring to the chamber of commerce.

“We want a swift solution for the subsidy issue. And if it is possible, we see that it would be better to let the fuel price be adjusted to the international market.”

Suryo preferred the term “relocation” rather than “removal” in discussing the subsidy issue. “The subsidy would still be there, but it would be channeled to sectors that provide more benefits to the country like infrastructure and education,” he added.

He admitted that tariff hikes would mean higher costs, thus prompting business owners to increase the price of their products. “But I do think that businesses will understand as long as there is a clear explanation that the subsidy fund is being channelled for a good use,” he added.

The government has allocated Rp 137.3 trillion ($14.4 billion) for fuel subsidies and Rp 64.9 trillion for electricity subsidies in the revised 2012 state budget. Next year, however, the energy subsidy is projected to cost Rp 274.7 trillion.

An increase in prices would also boost state utility Perusahaan Listrik Negara’s ability to invest in power plants.

The government last raised the electricity tariff in 2010.