PLN told not to buy subsidized diesel oil

The government has asked state electricity company PT Perusahaan Listrik Negara (PLN) not to buy subsidized diesel oil from the market but should buy the fuel at a price set for industrial users, Kompas reported on Wednesday (May 16).

To meet that demand, PLN has proposed to the government to increase basic electricity tariffs by 20 percent to cover the increasing diesel fuel costs for its power generation, according to Minister of Energy and Mineral Resources Purnomo Yusgiantoro and PLN president Eddie Widiono.

Eddie said the government had not yet given its final approval for the electricity tariff increase, and currently both parties, the government and PLN, were working out on the proper level of tariff increase.

He noted that the 20 percent tariff increase proposal was still below PLN's initial target of 24 percent tariff increase for 2001, that would be pursued gradually, namely 2 percent increase every month. But because it's already half way toward the end of 2001, PLN would be willing to accept the 20 percent increase.

Meanwhile, Purnomo said the government would allow PLN to increase its tariffs to cover the increasing costs as a result of the increase in the fuel price. However, Purnomo said, PLN must pursue an accountable level of increase that would be acceptable to the people.

"We hope that the increase should be about 20 percent. If it is still not enough, it must follow the existing scenario, that is no more than 25 percent," Purnomo said.

The decision over fuel and electricity tariff increase would be discussed at a meeting with Vice President Megawati Soekarnoputri on Wednesday (May 16). The decision would be taken based on various considerations, including the current social and political situation.

For the fuel price increase, Purnomo said, the government would select the items whose price increase would not be sensitive to the people at large. (*)