PLN, textile producers negotiate over electricity rate
Monday, July 31 2000 - 02:30 AM WIB
State electricity firm PT PLN and the Association of Indonesian Textile Producers (API) are negotiating over basic electricity tariffs for textile industry for year 2000, following a threat from PLN's West Java branch's threat of imposing 3.3 percent penalty against textile producers.
API's West Java branch's secretary general Ade Sudrajat called on all of API members not to make any written agreement with PLN to maintain the association's bargaining position.
"We need to voice this to anticipate further pressure from PLN's branches like an administrative penalty of 3.3 percent imposed by West Java branch," he said.
"The association is fighting for a basic electricity tariff increase of only 36 percent that will be imposed gradually, namely 20 percent for the first six months period and 16 percent in the next six months period," he added.
Ade said his call was to support a circular letter by the secretary general of the central API executive board, Irwandy Muslim Amin, that inform its members about the ongoing negotiation based on circular letters from PLN and from the minister of industry and trade.
PLN said in its letter No. 719/ 160/DIISAR/2000, signed by marketing and distribution director Eddi Widiono S. that the state electricity company was ready to find a win-win solution for businesses by promising discount, credit policy or multi-purpose tariffs.
Meanwhile the minister of industry and trade said in his letter No. 562/MPP/ 6/2000 addressed to the minister of mines and energy that the new electricity tariffs hit especially steel and textile industries.
Steel and textile producers in the tariff category of 1 to 3 and 1 to 4 brackets suffered an electricity tariff increase of 88 percent and 101 percent respectively compared from basic electricity tariff they paid in 1998.
Because of the sharp increase, production cost in the steel and textile industries increased by 6 percent to 7 percent. And therefore, the electricity tariff would likely weaken their competitive advantage in the international market. And therefore, he called on the mines and energy minister to review the tariff increase. (*)