PLN to further cut its fuel oil consumption to 8.1% of total energy use

State utility firm PT PLN targets to further cut its fuel oil consumption to 3.4 million kiloliters (KL) in 2012 or down to 8.1 percent of its total energy consumption from projected 18.9 percent this year, Minister for Energy and Mineral Resources, Darwin Zahedy Saleh said.

The minister said during a hearing with the House of Representatives (DPR) Commission VII, which oversees energy sector that the state utility firm aims to cut the consumption of fuel oil as it is more expensive and shift to cheaper energy sources such as coal and gas.

Last year, the company?s fuel oil consumption stood at 23 percent of its total energy consumption.

He said going forward the government will ensure that the gas and coal supply to PLN will increase. The rise of gas and coal supply to PLN will help reduce costs of PLN, which ultimately provides room for the government to reduce electricity subsidy for PLN.

The energy ministry aims to supply gas to PLN at 372,557 bbtud, or supplying 25.7 percent of total energy consumption of PLN, slightly down from this year's target of 25.9 percent.

While coal supply to PLN is targeted at 48 million tons next year, or 56.6 percent of PLN?s energy consumption, up from 45.9 percent this year.

On Thursday, the House Commission VII has agreed on the government proposal to set electricity subsidy at Rp 45 trillion in 2012, down from Rp 65.6 trillion set for this year. The final subsidy amount is pending approval by the House plenary session.

The government proposed lower subsidy as it assumed the House will approve a 10-percent electricity tariff increase for next year. (roffie)