House agrees to increase PLN?s profit margin to 2 percent

The House of Representatives has approved of the proposal of PT Perusahaan Listrik Negara (PLN) to increase the profit margin of the state electricity company to 2 percent from 1 percent in the 2009 fiscal year.

The approval was given during the hearing between the Commission VII of the House, the Energy and Mineral Resources Ministry and PLN management in Jakarta on Friday evening.

The agreement was part of the deliberation for the revision of the 2009 state budget between the House members and the government. PLN earlier proposed an increase in the profit margin to 3 percent but the proposal was turned down.

As a state company, which holds the exclusive rights in the distribution of electricity in the country, PLN receives a government subsidy for the provision of electricity to household customers because electricity tariff is fixed by the government. The subsidy includes a profit margin for the company.

Besides asking for a higher profit margin, PLN also has also proposed for an increase in the subsidy to Rp 56.53 trillion or Rp 10.57 trillion higher than the amount currently stated in the state budget.

However, the House has not yet approved the proposal for the higher subsidy on the ground that the plan to fix the exchange rate assumption of rupiah against US dollar at Rp 10,600 and the assumption of the crude oil price at $61 per barrel had not been approved. (*)