The Indonesian Government Will Increase Electricity Price Effective July 1, 2010

The Indonesian Government has submitted a proposal for an increase in electricity base price (TDL) to the people assembly. It seems that the assembly has also given a signal to approve the hike by July 1st, 2010. This price increase will be in step and will exclude the 450 volt ampere class which is usually the lower income families.

High Voltage Powerlines in Riau

The assembly budgetary committee head Harry Azhar Aziz stated that the government subsidy will be taken off from middle and upper class families while the poor will continue to enjoy the subsidized price. “Every customer class will have an increase according to its class, it won’t be the same across the board,” he added

The tentative increase is as follow

* 450 VA customers gets 0% increase
* 900 VA customers gets 5% increase
* 1,300 VA customers gets 10% increase
* 2,200 VA customers gets 15% increase
* 3,300 VA customers gets 20% increase
* 6,600 VA customers and up gets 20% increase as well as 20% lower of base price threshold

“Customers with 6,600 VA and up subscriptions are usually luxury houses by people from high income families. Their increase therefore is bigger. The subsidized price is still there, but the usage covered by the threshold is lowered. We have lowered the threshold to 80% last year, and to 50% at the moment with 2010 state budgetary proposal, and will be lowered further toward 20 % later on,” Harry explained.

The Indonesian Consumer Advocacy Group (YLKI) daily manager Tulus Abadi stated that it is very hard to avoid electricity price increase. The last time the price was increased was in 2003. Even then it wasn’t fully implemented.

Other than that, he said, the electricity generation upstream costs have increased many times. The electricity cost of production which is currently around Rp 1.100 (USD 11 cents) per kilowatt-hour can not be covered by the electricity selling price of Rp 650 (USD 6,5 cents) per kilowatt-hour causing unbelievable burden to the state budget.

“We can understand the Government intention to increase the price,” says Tulus

What needs to be remembered, the Government must guarantee some sort of protection scheme for families that need the subsidy. YLKI is of the opinion that the stepped increase proposed by the Government will do just that.

“The 450 VA customers are about 80% of total electricity consumers,” illustrate Tulus

He believes that the increase will not affect the business especially small business.

“Electricity contribution for industry is only about 2 to 10%, except for textile industry. The most important thing is that the Government must maintain the increase price of commodity to not exceeds 10%,” Tulus said