New clause in electricity bill allows localization of electricity tariffs

Five new clauses have been added to the electricity bill which is currently being debated at the House of Representatives, a senior official of the Energy and Mineral Resources Ministry has said.

J. Purwono, the director general of electricity and energy utilization, said in Jakarta on Wednesday that the first new clause regulates the distribution of authority between central and local governments in development of power projects and in determining electricity prices in regions.

"Local governments can for example establish a company or invite a private company to build a power plant in isolated areas which have not been covered by PLN?s services. They can determine their own tariffs,? he said. ?The central government will only determine the tariff of electricity connected to PLN?s networks,? he added.

The second clause, according to Purwono, stipulates the possibility of establishing local tariffs. ?It means that tariffs of the electricity provided by PLN can be different from one area to another depending on the quality of the services in these areas.

The third clause covered the aspect of security and work safety in the provision of electricity services, while the fourth and fifth clauses covered compensation for properties used for power infrastructure, and penalties and sanction on electricity theft, he said.

The new bill will replace the electricity law Number 15/1985 which has been considered out of date. The House passed new electricity law in 2002 to replace the outdated law, but the implementation of the new law was opposed by the Supreme Court because it think too liberal.

"The final objective of (tariff) localization is to reduce subsidy. The subsidy will only be given to areas where electricity supply is bad. So it's like a cross subsidy," he said. (Bernard)