GOVT STILL PLANNING TO RAISE POWER RATES

By Andi Abdussalam

Jakarta, Sept 30 (ANTARA) - The House of Representatives (DPR)'s Commission VII on energy affairs  hoped that the government, based on an agreement reached in hearing recently, would not cancel its plan to increase the basic power rates by an average of 15 percent in January next year .          However, the government is of the view that the agreement has not yet become a decision of the House because it was made at the House's commission level.  So, the decision is not yet final and that a chance for the government to raise the basic power tariffs (TDL) is still open.          The government has planned to increase the TDL in an effort to solve the problem of subsidized electricity.  "We have thought since the beginning how to solve the electricity subsidy problem. If the tariffs are not increased there must be alternatives," Finance Minister Agus Martowardojo said on Wednesday.          However, the House Commission said that the problem could be solved through an efficiency drive. Thus, the commission asked the government to support the efficiency drive of state-owned power firm PLN so that it would not need to raise its power rates in 2011.          "The success of PLN in avoiding a power rate tariff increase will depend on its efficiency," Chairman of House's Commission VII on energy affairs Teuku Riefky Harsya said. He said that the decision taken by the government and Commission VII not to raise the basic power rates would depend on how far PLN carried out its efficiency programs.          The House and the government during a hearing with Commission VII last week agreed not to raise the electricity tariffs in 2011, though it has planned to raise the TDL by an average of 15 percent next January.  For that, PLN was asked to save Rp8.1 trillion on switching the use of fuels to gas, coal and other alternative energies.          According to a senior energy government official, PLN will get a gas supply amounting to 100 million metric standard cubic feet per day (mmscfd) for its power plants in 2011.           "The additional gas supply would be obtained from three locations, namely the Jabung field amounting to 30 mmscfd, Singa field 30 mmscfd and Jambi's Merang field with a volume of 40 mmscfd," Renewable Energy and Energy Conservation Director General Luluk Umiarso said at a hearing with the House Commission VII on energy affairs recently.           Luluk said that with the additional gas supply PLN could reduce its fuel oil consumption. "PLN would be able to save on Rp2.53 trillion with the additional gas supply," he added.          Commission VII chairman Teuku Riefky Harsya said that the government should carry out the decision not to raise the power rates, and that the gas supply to PLN should be supported.           "We appreciate the PLN commitment and that the government should support the allocation of gas to PLN," Riefky said. He said that the decision taken by the government and the House might not be changed, even if  at the deliberation of the House's Budgetary Agency.          "We hope all sides would carry out this decision because the government and the House were not willing to put further burden on the people," he said.          Meanwhile,  Chief Economic Minister Hatta Rajasa said the decision to cancel the planned basic power rate increase was still a decision of a House commission. It has not yet become a decision of the  House. "I received a report from the minister of energy and mineral resources that the decision was taken at the commission level of the House," the coordinating minister for economic affairs said.          He said that the matter would still be taken for deliberation to the Budgetary Body of the House. It still has to be waited what it would decide about it.          Hatta said that the decision to cancel the planned electricity tariff increase would become a House decision if it had been deliberated by the House plenary on the 2011 state budget. The government through the submission of the 2011 draft state budget, has earlier planned to raise the electricity tariff by an average of 15 percent.          The chief economic minister said that he had held talks with PLN over the possibility of the cancellation of the plan. "We talked to PLN about the cost that could be saved if efficiency is carried out by the state electricity company," he said. If the tariff is not raised it would increase the amount subsidy.          "If subsidy is not reduced while the power rates were not cut either, it then would require PLN to lower its basic production cost," he said. Reduction of production cost could be carried out through reducing the use of fuel oils.          The government's insistence to raise the power rates was allegedly influenced by an external intervention, but it quickly denied the allegation. Finance Minister Agus Martowardojo said the government was not influenced by external intervention in its plan to raise the basic electricity tariffs (TDL).          "It was said we want to increase the TDL rates because there is a multilateral agency which asks us to do so. This is not true but we want to expand our fiscal network without being regardless of the people who are in a difficult economic condition," the finance minister said here on Wednesday night.          He said that the government had since the beginning sought for a solutions to the electricity subsidy with looking into various proposed alternatives, including raising the TDL rates.          "We have thought since the beginning how to solve the electricity subsidy problem. If the tariffs are not increased there must be alternatives," the finance minister said.          Earlier, World Bank senior economist for Indonesia Enrique Blanco Armas said that Indonesia was the second country to sell electricity at the lowest price, namely about 7 US dollar cents per Kwh, or lower than that of India which was 6 US dollar cents.          Enrique Blance Armas was quoted as saying that the power rates for household consumers and industry in Indonesia were relatively low.          The World Bank economist said that the government decision to increase the electricity rates by an average of 15 percent last July was a small step towards its goal of fixing the energy subsidy target.          Enrique hoped that the government would therefore increase the power rates in stages so that the subsidy which had been provided so far could be switched to the infrastructure budget.***2*** (T.A014/H-NG/f001  ) 30-09-2010 11:04: