Purnomo asks PLN to review power tariff index

The government has asked the state owned electricity company PLN to review its tariff index of 7 U.S. cents per kWh and adjust it to the latest development in the economy, Bisnis Indonesia reported on Saturday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Friday that the 7-cent-per-kWh tariff index, which is considered by PLN as the economic level for its power, no longer reflect the real condition of the company's overhead costs.

This year, the government has allowed PLN to gradually increase its tariff by 24 percent a year (by six percent per quarter) to bring its tariff to an average 7 cents per kWh. However, the increase in the tariff for the fourth quarter was recently delayed due to a continued protest from the public, despite the fact that PLN's tariff is still slightly lower than 7 cents per kWh.

Purnomo said that PLN had been allowed to seek other financing alternatives such as through bond offering to offset the fall in the revenue target as the result of the delay in the tariff.

PLN president director Eddie Widiono said that PLN planned to issue bonds in the middle of next year to finance its network expansion project. (*)