BPK audit to be used for power rates: Boediono

Coordinating Minister for the Economy Boediono said Friday the government would use results of the electricity generation audit of the Supreme Audit Agency (BPK) to determine subsidies to state electricity firm PT PLN this year, and how much it may have to raise power prices.

?I think the BPK?s figures are valid, so we will conduct our simulation for any related budget revision according to them,? he said. ?But let?s wait for the exact calculations from the (Finance Ministry) budgetary technical team.?

BPK unveiled Thursday the results of its month-long audit into the production costs of PLN,finding that the actual cost for electricity production this year would be Rp 833 per kilo-Watt-hour (kWh), or 4.3 percent lower than the firm?s projection.

However, PLN would still need an additional Rp 27.2 trillion (US$2.9 billion) for its operations if there was no rate hike. The government has provided a Rp 17 trillion subsidy this year.

The House of Representatives ordered the agency to carry out the audit following strong opposition to the government?s plan to raise rates this year to help PLN cope with rising fuel expenses, amid the limited capacity of the cash-strapped state budget to maintain the costly fuel subsidy to the firm.

The BPK findings raised hopes among consumers that the proposed hike would be minimal or dropped altogether because PLNs subsidy would be RI) 10.2 trillion, compared to PLNs initial projection of around twice that amount.

Meanwhile, PLN finance director Parno Isworo said Friday the agency used different assumptions on sales volume and fuel prices from its own in projecting the cost of electricity generation.

In its audit, he said, the BPK assumed that the electricity to be sold this year would be 111.9 TetraWatthour (TWh), 5.47 percent higher than 106.1 TWIt last year.

Meanwhile, PLN, in a bid to cope with the estimated 6 percent growth of the economy, projected sales would be 112.7 TWh. 6.26 percent higher than, last year?s amount.

?We want to make sure that we are able to meet the demand for electricity this year in accordance with economic growth,? Parno said.

He added the agency?s assumption on fuel prices was also much lower than its own, which assumed that prices of gas and coal would be 15 percent and 20 percent higher than the previous year.

?We use our assumption to cope with the possible volatility of fuel prices. Without, any financial reserve, PLN is at risk of facing a deficit, should. the world fuel price start fluctuating;? he said, adding that the current gas price was about US$2.65 per million British thermal unit.

He added that PLN would abide by any decision the government would take to overcome the company?s deficit problem due to last year?s fuel price hike. (*)