Indonesia government plans to increase electricity tariffs for 12 non-subsidized groups starting in 2020 - Photo: Privacy

JAKARTA (TheInsiderStories) – Indonesia government plans to increase electricity tariffs for 12 non-subsidized groups starting in 2020 after two years of flat rates. The policy is expected to reduce the government’s financial burden in the state budget, an energy ministry official said on Tuesday (07/2).

Starting next year, electricity tariff adjustments should be carried out every three months, referring to changes three production cost components, which are the rupiah exchange rate, inflation, and the Indonesian crude price, according to regulations.

Mulyana quoted the statement conveyed by energy minister Ignasius Jonan, saying that he would impose tariff adjustment in 2020, for 12 non-subsidized electricity subscribers, namely R-1/TR households (1,300 VA and 2,200 VA), R-2/TR 3,500 VA up to 5,500 VA and R-3/TR 6,600 VA and above, big business, big industry, government, and special services.

The mechanism for tariff adjustment for non-subsidized electricity groups has actually been in effect since 2014. However, since 2017 the government has decided not to increase or decrease electricity tariffs. In other words, the electricity tariff received by the community is currently in a stable position.

Until the end of this year, the electricity tariff will not change, albeit the state electricity (PLN) has rights to adjust the tariff every quarter, the Energy Ministry’s Director General of Electricity Rida Mulyana told reporters in Jakarta.

As a consequence, Mulyana said, the government compensates PLN for the production cost. Last year, the amount was Rp23.17 trillion (US$1.63 billion). Mulyana adds compensation costs could be reduced by making tariff adjustments.

To help reduce the state budget’s burden, the government will also reduce electricity subsidies by erasing subsidies for the 900 volt-ampere household group, which is estimated to save up to Rp6 trillion.

However, Mulyana said the government is being extremely careful in taking this decision because there are 24 million customers currently enjoying the subsidy.

Indonesia decided to freeze the electricity tariff in 2017 amid sluggish consumption growth. That led to a policy of capping thermal coal prices for power generation at $70 per tonne to help PLN manage costs.

Mulyana said the government has not yet decided whether the price cap on coal sold to power companies will also be changed next year.

At the time the coal price cap policy was announced in March 2018, officials said it would be reviewed in December 2019.

US$1=Rp14.200

Written by Lexy Nantu, Email: lexy@theinsiderstories.com