Basic electricity tariff increase for all users: PLN

The president of State electricity company PT Perusahaan Listrik Negara (PLN), Eddie Widiono Suwondo, said the planned 20 percent increase of basic electricity tariffs would be applied to all level of customers, including low-income household electricity users.

Eddie said that the increase would be pursued gradually in every three months, so that electricity tariffs would reach an economical level of 7 U.S. cents per kilowatt per hour (kWh) in 2005.

"With this scenario, customers that currently enjoy the largest subsidy level will see larger acceleration of tariff increase. So, in terms of percentage, the increase (for low income household customers) will be bigger than the others, but in the terms of nominal value, it would not be like that, though," he said.

Eddie said that in year 2005, PLN would be able to sell electricity at 7 U.S. cents per kWh plus a margin for Java, as for areas outside Java, PLN would not yet take a margin for a certain period.

However, legislator Ramson Siagian from the House of Representatives Commission VIII expressed his disagreement with PLN's strategy by increasing electricity to all level of customers.

Ramson said that low income household users, namely those consuming electricity of 900 volt ampere at the maximum, must still be given subsidy. He suggested that the subsidy be lifted only from those consuming electricity of more than 900 VA. Even so, the lifting of the subsidy must be pursued gradually.

Meanwhile, House of Representatives Speaker Akbar Tandjung and legislator Pramono Anung said that the government's move to increase fuel and also electricity prices was "understandable" due to the severe budget deficit.

Akbar and Pramono were quick to add, however, that further explanation from the government was needed to prevent any ramifications from raising fuel and power prices.

"It does not mean that we fully agree with the move. The House needs further explanation from the government," Akbar said.

"It should be clearly stated ... how much will we get from the hikes and how the government will disburse it to the public," said Pramono, a member of House Commission VIII for the environment, research and technology affairs.

But President Abdurrahman Wahid said the government had to increase fuel prices and electricity rates, as well as the value added tax (VAT), because the increases were tied to the International Monetary Fund (IMF)'s US$5 billion bailout program for the country.

"We are tied to the IMF rules that say we should cut the subsidies, so from now on the subsidies will gradually be phased out," Abdurrahman said after Friday prayers at the presidential palace's Baiturrahim Mosque.

The Cabinet decided on Thursday to cut subsidies and raise fuel and power prices by 30 percent and 20 percent, respectively, in June, as well as to increase the VAT by 2.5 percent in July. The moves are designed to plug a budget deficit that is threatening to reach 6 percent of gross domestic product (GDP). (*)