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PLN Told to Suspend Rate Hike for Rich
Reva Sasistiya | February 15, 2010

PLN has been asked to suspend the new policy until residents are better informed about it. (Antara Photo) PLN has been asked to suspend the new policy until residents are better informed about it. (Antara Photo)
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The Energy Ministry on Monday urged state-owned electricity company PT Perusahaan Listrik Negara to roll back a rate increase for affluent customers that was implemented last month, saying PLN needed to properly inform the public about the hike and seek the approval of the House of Representatives.

“PLN should temporarily suspend the increase,” said Jacobus Purwono, the ministry’s director general of electricity and energy utilization, after a meeting of the House’s Commission VII, which oversees energy issues.

PLN president director Dahlan Iskan said he would abide by the government’s instructions.

However, PLN director Murtaqi Syamsuddin said the tariff increase was implemented according to guidelines set in this year’s state budget.

“According to the state budget, PLN is allowed to raise the tariff on rich customers to support power efficiency and to cut the [total] electricity subsidy,” he said.

Golkar Party lawmaker Satya Widya Yudha rejected Murtaqi’s argument, saying the Electricity Law states that the House of Representatives must approve any increase in the tariff.

“The tariff increase must be approved by the House of Representatives and it could only be proposed by the government, not the president director of PLN,” Satya said.

The new policy took effect for some customers last month. About 378,000 households were required to pay more for electricity if their consumption exceeded 50 percent of the national average. Any amount above that level would be charged at market rates, rather than the government’s subsidized rate.

The government has allocated Rp 35.3 trillion ($3.77 billion) to the electricity subsidy in the 2010 state budget, and has Rp 2.5 trillion left from the 2009 allocated subsidy. PLN had asked for a subsidy of Rp 50 trillion.

The government, which is seeking ways to reduce the total subsidy, also granted PLN a 5 percent sales-margin subsidy on electricity tariffs.

PLN has been mired in red ink for years, mostly as a result of being forced to sell electricity at below cost.

In 2008, PLN posted a record loss of Rp 12.3 trillion. In 2009, however, it recorded a rare profit of Rp 6.6 trillion.