Power hikes ?will depend on oil prices?
Saturday, January 28 2006 - 02:35 AM WIB
Vice President Jusuf Kalla said on Friday in Jakarta that the government was still keeping an open mind on the actual size of the hikes.
?It?s still being calculated, and will depend on the price of oil. If the price of oil falls, then there will be no increase in power prices,? he told reporters.
Kalla was responding to mounting protests from the business community over the possible power hikes, with some firms saying they will not be able to survive another increase in utility prices amid lingering economic difficulties
Some members of the Indonesian Chamber of Commerce and Industry have threatened to refuse to pay any increases, saying the current rates were already excessive in regard to international power prices.
State Minister for National Development Planning Paskah Suzetta previously said the government might have to raise electricity prices by an average of between 18.4 and 48.3 percent this year, to help PLN cover rising fuel costs. But the suggestion has been opposed by some lawmakers, who urged the government to audit PLN production costs to find ways to improve efficiency and reduce the likely size of the increases.
Bank Indonesia had previously warned that electricity hikes of more than 30 percent would push inflation higher than the central bank?s year-end target of about 8 percent.
Kalla said increased electricity charges would be unavoidable if oil prices remained high. Without the increases, PLN could go under given the limited capacity of the state to subsidize the power firm?s operations, he said.
?If oil prices go above US$70 per barrel, the government?s (annual) subvention of Rp 15 trillion to PLN won?t be enough ? so we will have to increase electricity rates,? he said, without elaborating.
U.S. crude oil futures currently stand at about $66 per barrel. (*)