Leony Aurora and Anissa S. Febrina, Jakarta – The question of agreements on power prices between the business sector and state electricity firm PT Perusahaan Listrik Negara (PLN) is irrelevant as the law provides that it is the government that determines tariffs.
Committee for National Economic Recovery (KPEN) chairman Sofjan Wanandi, responding to Industry Minister Fahmi Idris' suggestion that rates were negotiable, said Wednesday that the idea was not feasible for the present as the legislation would need to be amended first.
"The legislation doesn't allow it. The government is the one that determines power prices," said Sofjan during a joint media conference with the Indonesian Chamber of Commerce and Industry (Kadin), which reiterated its objections to any power price increases.
In 2004, the Constitutional Court annulled the 2002 Electricity Law, which envisaged the gradual liberalization of the sector, based on the argument that electricity supply was an essential service and should therefore remain under state control. The government has yet to draft a replacement for the annulled law, with the result that the earlier 1985 Electricity Law has been reinstated. This provides that power rates are for the government to determine.
Earlier, Fahmi had said that the government might regulate household power rates as it was households that would be most affected by the hikes. "For industry, the prices would be negotiable," said Fahmi. "The government could set a floor or a ceiling price as a reference," he added.
Speaking after a meeting with the representatives of some 100 trade and industry associations, Kadin chairman MS Hidayat said the business community could not cope with a hike this year.
Industry already shoulders a heavier burden during peak hours of 5 p.m. to 10 p.m., when PLN doubles its tariffs and imposes a penalty for additional usage above a quota of half average consumption, he said.
According to Kadin, given this formula, industrial users now pay 8.66 US cents on average per kiloWatthour (kWh), higher than in neighboring countries such as Malaysia, where power for industry costs 6.2 US cents per kWh, and Vietnam where it only costs 5.2 US cents per kWh.
Sanny Iskandar of the Indonesian Employers Association (APINDO) said PLN was already charging higher rates to industry, as admitted in a circular issued by PLN's West Java and Banten distribution area.
The circular, dated Jan. 17, specifies guidelines for a business-to-business approach to major consumers, including setting the price at Rp 1,380 (15 US cents) per kWh, more than triple the current rate of Rp 439 per kWh for customers with a power capacity of more than 23 kiloVolt Ampere (kVA).
Muljo Adji, the general manager of PLN's Java-Bali transmission center, said that this rate was in fact only chargeable in return for higher quality and greater dependability of service. "The rate applies only to customers that want to participate in the program," said Muljo.
Figures from the Energy and Mineral Resources Ministry reveal that industry accounts for 38.7 percent of PLN's revenue, and that a power price hike of 50 percent would cause their operating costs to increase by 2.36 percent on average.