Govt may hike electricity rates by 15% next year

After ordering an electricity rate hike in July, the government may again increase the price of power by 15 percent in 2011 and reduce subsidies given to the country?s electricity sector, The Jakarta Post reported Wednesday.

The government does not have many other choices other than to cut the subsidy to reduce state spending, Finance Minister Agus Martowardojo said at a press briefing on the proposed 2011 state budget Monday.

?In the 2011 draft state budget, the subsidy for electricity would be reduced to Rp 41 trillion [US$4.55 billion] from Rp 55.1 trillion in 2010,? Agus said

State electricity company PLN would need to increase electricity rates by 15 percent to avoid a revenue shortfall due to the reduced subsidy, he added.

The Rp 41 trillion subsidy of the power sector will be part of Rp 184.8 trillion in total government subsidy spending in 2011: Rp 133.8 trillion for the energy sector and Rp 51 trillion for the non-energy sector. (*)