New electricity law will cause 30% increase in electricity tariff

The implementation of the new electricity law will result in an increase in the electricity tariff by between 20 percent and 30 percent, according to a study made by the Working Group on Power Sector Restructuring (WG-PSR).

The study as reported by Kompas daily on Friday indicated that the implementation of the electricity law No 22/2002 will result in the split of state electricity company PLN into several companies.

This will result in a long chain in the process of selling electricity to public. This in turn will increase the operating costs of PLN and an increase in the electricity tariff by between 20 percent and 30 percent.

WG-PSR also indicated in its study that the electricity tariff outside Java more than doubled than those in Java due to the lack of incentives offered to investors conducting electricity activities outside Java. The investment cost outside Java reached between 8 and 12 US cent per kWh, as compared to only 4.5 US cent in Java.

According to WG-PSR's price stimulation, the new law will result in the increase in the total electricity cost to US$98,000 per day as compared to US$68,000 per day before the introduction of the law. (*)