PLN's operating cost to increase 27% despite lower fuel use

The operating cost of the state owned oil and gas company PLN will likely increase by at least 27 percent to Rp 843 per kWh next year from about Rp 664 per kWh at present despite the expected decline in the use of fuel, Koran Tempo reported on Monday.

PLN's president director Eddie Widiono said in Jakarta last week that although the use of fuel would decline by about 17 percent thanks to the operation of several steam power plants including the Cilacap and Tanjung Jati B power plants, the increase in the operating cost could not be avoided due to higher fuel prices.

He said that the increase in the fuel prices would double the total fuel spending to about Rp 41.94 trillion next year from Rp 21.94 trillion this year. "The surge in the fuel spending has contributed to the sharp increase in the operating cost," he added.

He hinted that with the sharp increase in the operating costs, the rise in the electricity tariff could not be avoided, because the government's subsidy would be unlikely be able to cope with the surge in the operating costs.

PLN had asked for a subsidy of about Rp 38 trillion next year but the amount of the subsidy approved by the House of Representatives reached only about Rp 17 trillion. Last year, PLN received a subsidy amounting to Rp38.5 trillion.

PLN has proposed an increase in electricity tariff by between 23 percent and 59 percent, depending on the subsidy provided by the government. (*)