Indonesian government announces plans for power price increases

• 14 years ago (2010-06-15)
• Junior Isles

North America 1004

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The Indonesian Government has approved electricity tariff increases of up to 18 per cent from July 1. Commercial, industrial and wealthy domestic consumers will be charged a higher rate, whereas less wealthy households (around 75 per cent of all domestic consumers) will be exempt.

The government has also debated how much to help PT Perusahaan Listrik Negara (PLN) increase revenue in order to develop the country’s aging electricity generation infrastructure.

It is estimated that 5.9 million domestic consumers will face tariff increases: commercial customers will pay 12-16 per cent more; industrial users 6-15 per cent more and government offices 15-18 per cent more. There will be no rate change for 31 million domestic consumers. These rises are expected to generate extra Rp 4.8 trillion (around $500 million) for PLN in the rest of this year.

In previous years PLN has suffered heavy losses because it has been forced by the government to sell electricity below the cost of generation. As a result the government has had high subsidy bills (around $6 billion for 2009) and PLN has been unable to invest in its power infrastructure.

PLN plans to embark on a major expansion of generating capacity, involving an investment of $7.6 billion a year until 2018.