Camelia Pasandaran, Dion Bisara, Arti Ekawati & Faisal Maliki Baskoro – Smarting from a barrage of criticism from businesses and industries, the government on Wednesday acknowledged that a recent decree raising electricity rates may increase some firms' bills by much more than a 15 percent ceiling it had promised.
When announcing the rate increase that took effect this month, the government had advertised the increase at between 6 percent and 15 percent. But business and industry associations, citing their own calculations, this week warned it could reach up to 100 percent for some.
The country's top economic officials, including the coordinating minister for the economy, Hatta Rajasa, and the ministers of finance, industry and energy, met throughout Wednesday to formulate a response to the associations' claims.
The coordinating minister later acknowledged that with the new rates, plus additional fees, some users would see their bills go up by as much as 40 percent, although he said others would actually see their rates fall. He did not address claims that some businesses were seeing rate increases of 80 percent to 100 percent.
Hatta said the government had asked state utility PT Perusahaan Listrik Negara to lower the "extra variable fees" that he blamed for the skyrocketing rates. These fees impose additional fees for large industries during peak usage hours and for those that exceed average consumption levels.
"I asked for the fees to be adjusted to a reasonable rate, so that they will not burden [industries]," Hatta said.
However, he said the fees were still a crucial conservation incentives, given the country's chronic power shortages. "In the future, when we can meet electricity demand, we probably won't need them any longer," Hatta said.
Most industry representatives acknowledged the need for a rate hike, though many warned of possible layoffs as a result.
Irvan Kamal Hakim, deputy chairman of the Indonesian Iron and Steel Industry Association (IISIA), on Wednesday said he welcomed the government's plan to review the rates. He acknowledged that a rise was unavoidable, but asked that it be limited to a maximum of 20 percent.
Sofyan Wanandi, chairman of the Indonesian Employers Association (Apindo), said the association supported an increase of 9 percent to 15 percent.
Franky Sibarani, secretary general of the Indonesian Employers Association (Apindo), said that at this point all that companies really wanted was for the government to clarify the situation and allow them to get back to business. "What we want is certainty, not confusing regulations on the rates," Franky said.
Industry Minister MS Hidayat said the new rates should be announced within a week.
The rate increases were introduced to enable PLN to invest in the nation's power infrastructure, and to limit the government's electricity subsidy, which was Rp 56 trillion ($6.2 billion) last year. PLN has been forced to sell electricity at below production costs for years, and the nation's power grid has suffered as a result, with blackouts a continual problem.