Maximum power rate increase is 18 percent: Minister

Following strong criticism from the business community, the government has decided to cap its planned increase of electricity rates for industries at 18 percent, an energy minister said Monday, the Jakarta Post reported Tuesday

?For industries, the maximum increase will be 18 percent, and the average increase will be between 10 and 15 percent,? Energy and Mineral Resources Minister Darwin Zahedy Saleh said during a hearing with the House of Representatives Commission VII overseeing energy and mineral resources.

On July 1, the ministry had issued a ministerial regulation stipulating the new power rates. In an earlier communication with the House and the business community; the government had maintained that the maximum increase would be 18 percent and the average would be 10 percent.

However, the regulation later drew strong criticism from many business associations, which said the increase was in fact far higher than what the government had promised.

?By our calculations the rate increased between 39 and 101 percent," said Indonesian Employers Association (Apindo) chairman Sofjan Wanandi, who also attended the hearing at the House.

Meanwhile, in another room at the House, 32 business associations demanded House Commission VI overseeing trade, industry and investment to drop the regulation.

Indonesian Textile Association deputy chairman Ade Sudrajat said the new power rate would increase the prices of Indonesian textiles by an average 7.2 percent.

?Our products will no longer be competitive in their own [country] because no price increase will be applied to imported goods,? he said.

Indonesian Young Emtrepreneurs Association (Hipmi) deputy chairman Silmi Karim said the increase would lead to a higher inflation rate that would force Bank Indonesia to increase its benchmark interest rate.

?This means the capital cost for businesses will be higher and it will be bad news for small and medium enterprises, which account for 95 percent of Hipmi members? he said.

Indonesian Chamber of Commerce and Industry (Kadin) chairman and House Commission VI member Adi Putra Tahir said the new rates would create new problems for businesses.

At the conclusion of the hearings, both Commission VI and Commission VII ordered the government to scrap the regulation.

Darwin said revision would have to wait for discussions between PLN and the business community on how the increases would affect industries.

?We need certainty before Aug. 1 or before the new electricity bills are issued,? he said. (*)