Government may raise electricity tariff by 25%

The government is considering raising basic electricity tariff by 20-25 percent next year, Minister of Energy and Mineral Resources Darwin Z. Saleh said.

The minister said in a hearing with the House of Representatives that his office together with the offices of the Coordinating Minister of the Economy, the State Minister of State Enterprises and state owned electricity firm PT Perusahan Listrik Negara (PLN) is in the phase of calculating the amount of the increase.

They would put into consideration the amount of investment needed by PLN to expand the distribution of electricity nationwide and the public's purchasing power.

The government is seeking to reach an electrification ratio target of 66.2 percent next year by installing among others solar home system and expanding power network in all the provinces.

Director General of Electricity J Purwono said the government and the House's budget commission had agreed to provide PLN with a 5 percent profit margin. With such a profit margin, the subsidy for PLN would be cut from Rp 58 trillion to Rp 20 trillion.

"In order to cover the Rp 20 trillion shortage of funds, the basic electricity tariff should be increased to between 20 and 25 percent," Purwono said.

He said the increase would be first imposed on customers of more than 6,000 VA that is non-subsidized customers, including households, businesses and industries. (*)