PLN will spend about Rp 14.3 trillion to buy diesel oil next year

State owned electricity company PLN will spend about Rp 14.3 trillion next year to buy diesel oil for its power plants. The amount will be about 62 percent of the company?s spending allocated for energy including gas and energy, Kompas reported on Friday.

PLN?s deputy director for trade and tariff, Aziz Sabaro said in Jakarta on Thursday that the total spending that will be allocated for the purchase of energy including diesel oil, gas and coal would reach about Rp 23 trillion in 2003, representing a significant increase from Rp 9 trillion this year and Rp 4 trillion in 2001.

"The budget allocation for the purchase of diesel fuel showed a continued increase from year to year due to the decline in the gas supply for the company?s several power gas plants such as Gresik power plant in East Java," he was quoted as saying.

According to Aziz, the increase in the use of the diesel oil has significantly squeezed the company?s earnings which have been under pressure due to the continued increase in the operating costs while the electricity tariffs it charged on customers were still relatively low.

"PLN needs at least 0.25 liter of diesel to generate one kilo watt hour (kWh) of electricity. If the price of the diesel oil is Rp 1,700 per liter, the electricity tariff should be ideally set at Rp 425 per kWh so that the company will be able to receive enough earning to support its operation," he said.

Aziz said that much of the company?s earnings were used to subsidize the household customers which were mostly charged Rp 250 per kWh.

PLN will raise its tariff by an average of six percent per three months beginning next year but the government will at the same time impose a sanction in the form of a 10 percent cut in the electricity billing if the company fails to provide a better service. (*)