Govt may delay electricity price hike

The government may delay its plan to increase the electricity tariff next year as part of the government?s program to accelerate growth in the country?s industrial sector, Finance Minister Sri Mulyani Indrawati has said.

Speaking in Jakarta on Friday, the finance minister said that the delay in the electricity price hike would consequently increase the budget allocation for the electricity subsidy. She estimated that the electricity subsidy would increase by Rp 12 trillion (US$=Rp 9,500) from the originally planned Rp 37.8 trillion, if the power tariff was not increased.

Sri Mulyani said that the budget deficit would also increase to 0.4 percent or about Rp 24 trillion as the consequence of the delay in the increase in the power tariffs. She said that the government spending would also be lower than the initial plan as the result of the delay in the power price hike.

But she said that the delay in the power tariff increase would be able to accelerate economic growth because with the existing tariffs the industrial sector would be more competitive in the market, while the people would also have a stronger buying power.

Meanwhile, state electricity company PT Perusahaan Listrik Negara (PLN) said that it planned to buy 12 new power transformers each with a capacity of 500 kVa as reserves for the existing facilities.

The company?s newly appointed President Director Dahlan Iskan said in Jakarta on Friday that with the purchases of the new transformers, the company would have no difficulties to provide the replacement if the existing transformers incurred technical problems.

He said that PLN would seek the government?s approval to buy the transformers directly from the market without a tender process so that the purchases could be carried much faster. ?If the purchase is carried out through a competitive bidding or tender, we will need at least a year to get the new transformers,? he added.

According to him, the transformers will cost PLN at least Rp 50 billion each. For purchases of the new transformers, PLN has allocated Rp 600 billion in its 2010 budget. (*)